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De-dollarization: What Happens if the Dollar Loses Reserve Status?…
De-dollarization: What Happens if the Dollar Loses Reserve Status?
impact of de-dollarization in the word
Fundamentally, de-dollarization would shift the balance of power among countries, and this could in turn reshape the global economy and markets.
Negative effects
-The fall in the value of the dollar negatively affects the country's exports.
-It affects people who receive remittances or money orders from abroad because for the same amount transferred they will receive less cash.
-National products on the stock market decrease in value
-The competitiveness of exports decreases their value
Positive effects
-Benefits product imports by paying lower prices
-With the fall in the value of the currency and the strengthening of other currencies, they can make trips with less money
-The latest technologies will have a lower value
-The behavior of the dollar also impacts the value of assets such as real estate, among others.
What is de-dollarization?
In short, de-dollarization entails a significant reduction in the use of dollars in world trade and financial transactions, decreasing national, institutional and corporate demand for the greenback.
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consequences in United States
For U.S. equities, outright and relative returns would be negatively impacted by divestment or reallocation away from U.S. markets and a severe loss in confidence.
There would also likely be upward pressure on real yields due to the partial divestment of U.S. fixed income by investors, or the diversification or reduction of international reserve allocations
A broad depreciation and underperformance of U.S. financial assets versus the rest of the world.
A weakening dollar could in principle create inflationary pressure in the U.S. by raising the cost of imported goods and services, though benchmark estimates suggest these effects may be relatively small.
While a structurally depressed dollar could raise U.S. competitiveness, it could also directly lower foreign investment in the U.S. economy.
De-dollarization in oil markets
Traditionally, the dollar is negatively correlated to oil prices. When the dollar appreciates, the imported price of oil rises and demand falls as a result, especially in emerging market (EM) economies. However, more oil sales are now being transacted in non-dollar currencies such as the renminbi
