Back in 2011, if I recall correctly, the World Bank published a report predicting the demise of the US dollar as the major reserve currency by 2025, which is next year (oops…sorry). According to the report, this transition will be driven by emerging market growth rates of 4.7% annually, compared to only 2.3% for developed countries. Six countries, Brazil, China, India, Indonesia, Russia, and South Korea will account for half of the world economy by then.
The greenback will be replaced by a multi-currency system composed of the dollar, the Euro, and the Chinese renminbi. This evolution will be driven by a significant increase in third-party international trade, direct investment, and mergers and acquisitions.
Similar reports and dire predictions have been around for decades. Let me add more icing to the cake. A recent viral story about the collapse of a longstanding “petro-dollar” agreement between the US and Saudi Arabia spread like wildfire on social media recently.
The viral story claimed that a 50-year agreement between the US and Saudi Arabia requiring the latter to sell its crude oil exports in US dollars had expired. Supposedly, this is meant to foreshadow the end of dollar dominance except there was no such deal. In short, the viral story turned out to be fake news.
Speculation about the fate of the US dollar will persist and impact many people (including my investors and partners) especially those who believe everything they watch and read in the colorful world of social media.
What is your opinion on the outlook for the US dollar over the next 5 to 10 years? Is there a possibility that the greenback will be replaced by another currency or something else? Should we consider divesting from our dollar assets now?
I invite you to participate in this survey to share your insights and predictions about the fate of the US dollar. Please send me your feedback via email. The results of the survey will be covered in our next webinar.