Dark prophecy comes true: The Dollar for a time before turning

No Empire lasts forever. This experience of the Roman Empire as well as the trading Empire of the Dutch East India company. With your decline of their currencie

Dark prophecy comes true: The Dollar for a time before turning

No Empire lasts forever. This experience of the Roman Empire as well as the trading Empire of the Dutch East India company. With your decline of their currencies, the denarius, the Guilder, the Nimbus of the reserve currency will be lost. History might repeat itself soon, at least in terms of the currency. Because the signs now that the American Dollar is going to lose this Status.

the clearest indication of the Performance of the "greenback is simply" to other currencies. The Dollar Index, which compares the Dollar with a basket of other currencies, recently fell to a 93.5 meter at the lowest level in two years. In the middle of March the Index had stood at 102 points.

Against virtually every currency, the Dollar lost last. Since the beginning of July he lost 2.5 percent against the Japanese Yen, 6.4 per cent, the Swedish Krona, 4.0 percent for the new Zealand Dollar. To went emerging-market currencies like the Real Brazil, or the Mexican Peso 6.0, respectively, 4.9 percent downhill. Only against China's Central Bank-controlled currency, the Renminbi Yuan, the Dollar, and lost only around 1.0 percent of its value.

but Above all, the Dollar is weakening against a currency: the Euro. In July alone, the Dollar lost 4.5 percent of its value. In March, the course was raced in the direction of parity, in the meantime, a Euro was only 1,0635 Dollar value. Today, there are almost 1,19 – a difference of about ten percent.

doubts about the Dollar to grow: "The Ball is to roll"

share prices of travel time in such orders of magnitude and forth. But on the foreign exchange market is many times larger than the stock markets and far more liquid, are the worlds. Some market players see the Status of the dollar as a reserve currency will diminish.

"The outbreak of the second virus wave has not only a doubt at a fast U.S. economic recovery advent. In the meantime, the Concerns of investors seem to go much deeper. For example, voices are already loud, the reserve currency is in danger see the Status of the US dollar as the world“, noted this about the Commerzbank foreign exchange specialist Thu Lan Nguyen. Your colleague Ulrich light man adds: "What were the last years issues, I have cracks at the end of presentations, if there was time, but (I've noticed already!) hardly anyone has really stopped listening, is suddenly hot ,floor talk'.“

According to Nguyen, there have been voices even misleading Analysts, and also whether it is the adoption of the Commerzbank, that the U.S. Dollar "is losing in the foreseeable future, its Status as a world reserve currency". Nevertheless, the expert points out that, "with regard to the world leitwährungs theme basically, the Ball seems to be in motion".

Already, the Dollar no longer has the global importance of him a few years ago condition. Yale Professor Stephen Roach, for example, had least of all expects that the world's currency reserves are only a little under 60 percent from the Dollars. The turn of the Millennium there were just over 70 percent.

"This is a Trend that could resume in the next few years speed," he wrote in a column for the financial news Agency Bloomberg, "particularly because the United States lead the Trend toward De-globalization and de-coupling."

stock exchange professionals to celebrate the EU package and change your opinion on the Euro.

without the reasons this debate is not led of course. The descent of the dollar resulted primarily from two factors – the unexpected strength of the Euro, but also the mistakes of the US government. As Bloomberg recently wrote, have been transformed by the economic stimulus package of the European Union (EU) former Euro-skeptics to Fans. The package I summoned a "neugefundenes sense of regional unity" up. To the market participants. The Deal "removes a lot of Fragility in the whole Euro area," commented a London-based asset Manager of the economic stimulus package to Bloomberg, and added: "This proves that, in critical phases of a fiscal Union, if it is necessary."

another factor is that, with the joint recording of debts may be a rival to US bonds was created. Yet there is a lack of a "safe Harbor" in the heterogeneous Euro zone, said another Analyst, to Bloomberg. Such a "safe Harbor" could have been created with the new bonds. This lead in turn to the question of whether the Euro is now a worthy Challenger to the hegemony of the dollar, as Bloomberg.

the Euro could continue

to upgrade a few asset managers now expect the Euro recovers in the further course of the year against the Dollar. As the target of most of the professionals see the brand of 1.20 dollars to the Euro. "The EU continues to grow, and uses the crisis as an opportunity. In the US, a crisis is just a crisis“, said a Hamburg-based asset Manager to Bloomberg. The Helaba goes even further: "Notwithstanding the recent weakness of the Greenback is overvalued, more in particular against the Euro. The purchasing power parity suggests that even at a price above 1.30," - said in a comment. "According to the previous pattern of increase would have to persist for a few more years and, above all, significantly steeper run. In addition, the trend threatens the Downward break since 2008."

Even the own government is not without fault

in addition to the strength of the Euro is faltering, the Dollar is also under the mistakes of its own government. It also Commerzbank expert Nguyen refers to: "My fear is that, in particular, to companies out of fear of the US economy to avert sanctions, increasingly, the US Dollar, or even entirely from the U.S. market. The latter is especially true for Chinese companies.“

Also Ray Dalio, head of hedge Fund Bridgewater Associates, sees errors in the own Administration. The Lord of the 138 billion dollars in managed capital, fear is as to the Dollar. "For me, the stability of our currency concern," said Dalio in an Interview with the channel "Fox". "We can't continue to make debt and printing money, rather than to working productively and for a long time to maintain," says Dalios judgment. "We ourselves are the greatest enemy of the dollar."

topic: fear of the Dollar: "We are our biggest enemy," warns the Star-Investor Ray Dalio

According to the financial professionals in the US would have to work "together in order to be more productive, more money than we spend to stabilize our currency, and a decent Budget set-up". The Commerzbank expert Nguyen agrees: "the financing of The so-called 'twin deficit' of the USA could be like in the early 2000s, the theme and burden for the Dollar." Because of the Corona-crisis, the US not only drive a high current account deficit, but also still a massive budget deficit.

Normally, the US will have no Problem, in such a case, simply to take on new debt – what was the position of the dollar. Most reliable financier in China. This could give problems, so Nguyen: "I'm not talking here, however, that the Chinese Central Bank could begin to sell their US Treasuries as a punitive measure against the USA, but rather a very natural Exit of Chinese investors, by a gradual separation of the two economies is driven."

Dalio is a plea not a question of to worsen relations with China even further. Whether the United States will get under the government Trump this curve, again, is questionable. Of course, the possibility that Trumps democratic Challenger Joe Biden takes over in the autumn of the rudder, and the descent of the dollar can still to stop is. Currently, Biden is leading the polls yet. The views of the election year, 2016, however, shows that a victory is already a done deal.

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Updated Date: 02 August 2020, 03:26

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