The dollar could lose its status as the main reserve currency in the coming decades, collapsed by the growing power of Asian economies, warns Craig Cohen, a strategist at JPMorgan Chase Bank.
In a recent article, the analyst recalls that the dollar “has been the dominant reserve currency in the world for almost a century”, but predicts that “it could lose” that condition and depreciate in the medium term due to “structural reasons, as well as to cyclic impediments.”
In this sense, the strategist explains that throughout history many other currencies lost their dominance due to changes in global economic centers, which are now moving towards Asia, with China “at the epicenter” of this economic transformation.
Beyond China itself, the expert points out that the Asian economic zone as a whole – spanning from the Arabian peninsula and Turkey in the west to Japan and New Zealand in the east, and from Russia in the north to Australia in the south – represents two thirds of global economic growth and 50% of global GDP.
The growing purchasing power of the region will increase the number of transactions in currencies other than the dollar, eroding its current status and laying the groundwork for its replacement as the dominant international currency, the strategist asserts.
“In other words, we believe that in the coming decades the world economy will pass from the dominance of the US and the US dollar to a system in which Asia exercises greater power,” concludes Cohen, who recommends diversifying investment portfolios with other currencies and with precious metals.
Latest posts by Steve Hill (see all)
- US officially accuses China of manipulating currency - August 6, 2019
- The largest bank in the US warns that the “century of dominance” of the dollar is ending - July 26, 2019
- Nissan to lay off 12,500 employees worldwide amid restructuring - July 25, 2019