The recent data from International Monetary Fund shows that in Q4, 2019, the dollars share in global foreign reserves reported by the IMF
dropped to 60.8% compared to the previous quarter, falling for the
second straight quarter.To get more news about
USD’s Proportion, you can visit
wikifx news official website.
As the number of confirmed cases continues to rise, the United States has
now become the epicenter of the global coronavirus outbreak. Before the
large-scale outbreak in the United States, due to the spread of the
virus across the world and the consequent interruption of global supply
chain, US stocks promptly responded with a heavy slump that triggered
trading curb four times in just a few weeks, with the S&P 500 index
tumbling by 20% from the highest point with unprecedented speed.
Under bailout pressure, the Fed took swift actions within a short period by
first adopting zero interest rate and then launching large-scale
quantitative easing, with a speed and intensity far beyond the
interpretation of traditional currency theories and expectations from
the market. While the Fed's policies have been somewhat effective in the
short term, some experts pointed out that the series of approaches are
essentially printing US dollars recklessly which will lead to dollar's
depreciation, dividing the cost of market rescue efforts on the world.
Experts warn that from historical experience, excessive quantitative
easing is currency devaluation which “beggar-thy-neighbor”, boosting
hidden risks of global inflation.
In fact, the Feds monetary policies have still failed to achieve satisfactory results, and the US
government has no choice but to issue another US$2 trillion fiscal
stimulus bill. Obviously, huge fiscal stimulus will seriously threaten
the sustainability of US government debt, and as the number of
unemployed people increases, the extreme gap between rich and poor will
greatly reduce US society's resilience to economic shocks.
Some analysts pointed out that after this round of crisis, the US dollar's
share in the international currency reserve may decline further.
On the other hand, data previously released by the IMF showed that while
the share of the dollar has fallen, the share of the Renminbi in global
foreign exchange reserves has risen. In the fourth quarter of 2019,
global foreign exchange reserves increased to US$11.829 trillion, up
1.5% from the previous quarter and more than 3% from the fourth quarter
of 2018. These include RMB assets worth of about US$202.79 billion,
accounting for 1.89% of the global official foreign exchange reserve
assets and surpassing the share of Aussie dollar (1.62%) and Canadian
dollar (1.84%).
With previous epicenters Wuhan and Hubei Province ending their lockdown restrictions, China is accelerating resumption of
production; the Chinese government has relatively greater fiscal space,
and coupled with significant reduction in leverage over the past four
years, the RMB assets' overall performance is relatively stable, showing
the characteristics of safe-haven assets.
Analysts pointed out that China's current national bond yields are higher, therefore more
attractive to international investors, and the RMB exchange rate will
remain on the track of appreciation in the long-term.
