The global outcry of de-dollarization has lately been spreading like wildfire all over the world. With the US dollar weakening due to forces like rising US debt, the speculative spree that the dollar’s end is near has been the latest highlight around the world. But is the dollar truly dying? UBS Global Research does not think so.
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Reasons Why the US Dollar Is Here To Stay For The Long Haul
#1: Panic Shift Will Ultimately Settle
UBS Global Research has outlined how the financial markets have always tended to shift interests. It has been noted from time to time that the global markets generally pivot their attention towards other prospects or dominant currencies. But that interest is usually short-lived. Despite the USD facing stark economic and political changes throughout the years, it has managed to maintain its status as the reserve currency.
#2: Unmatched Liquidity
The research forum later highlighted the liquidity quotient of the USD. The dollar’s dominance in the global trade, payments, and derivatives markets is unmatched, as such sectors sustain the dollar by supplying it with adequate liquidity. This is the most significant aspect for a currency to retain its supremacy in space.
#3: Factors Such as Security, Stability, and Dollar
The portal later outlines US exponential growth in the sector of law and order, which indirectly helps the dollar gain global appeal. At the same time, the US’s pioneering technology innovation and experimentation is also what contributes heavily to keeping the dollar on high ground.
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Erosion of the US Dollar: Not For Long
The de-dollarization narrative has been gaining attention due to BRICS and ASEAN nations coming up with their currency systems. At the same time, the weaponization of the USD, with the US facing geopolitical turmoil, also erodes the value of the USD in the long haul. Per UBS, these reasons do contribute extensively to the erosion of the USD. However, the research later shared that the robust backing of the dollar will help the currency from derailing further.
“All in all, we think the dollar’s reign will live on. At the same time, it will likely make some room for competitors along the way,” the analysts said. ”