Business The dollar weakened.Here is why its role as a world reserve has actually been introduced The dollar weakened.Here is why its role as a world reserve has actually been introduced Google +
Less widely used dollars like this are of little value.Sure, the US economy is the largest in the world, but the dollar is on the side of 88% of all currency trading, despite US accounting for nearly a quarter of a global gross domestic product.Countries, especially China and Russia, are also angry that the US could use monetary dominance to punish government officials around the world.
But even as the dollar fell 8.5% from its March high, according to the WSJ dollar index BUXX, -0.37% , there is still no clear path or even idea of how to replace the role of the dollar in the global financial system.
It was only a year ago that the former Bank of England Gov.Mark Carney has suggested Facebook’s Libra cryptocurrency could be a substitute, an idea that is now ridiculous due to project struggles, though Carney’s criticism of the dollar hegemony has proven if there is a dollar deficit.on the onset of coronavirus pandemic.
Brad Setser, a senior fellow on the Council on Foreign Relations, made another point.
“A weak dollar tends to lead to more intervention by countries seeking to protect their exports in the foreign exchange market, and thus further reserve reserves,” ; he told a blog post this week.
“A weak dollar thus typically results in higher not lower demand for the dollar from the world’s reserve managers.”
And how are dollar reserve managers collected? By buying the US Treasurys, which is easy to use as the US is releasing debt at a rapid rate, since the latest budget deficit figures released on Wednesday.
Setser said some countries returned to the market in June and July actively working to reduce their money – singing in Thailand, Taiwan, Singapore and India specifically.
“Many export-based economies with large external surpluses have agreed to let their currency fall against the dollar, but remain reluctant to let their currency be valued against the dollar when the tide turns.And so most of the world’s accumulation of dollar reserves tends to come when the market forces the dollar not to rise, ”he wrote.
The buzz
Initial jobless claims fell sharply in recent weeks, with state claims reaching 963,000, a decline of 228,000.
That was the first time during the pandemic that claims were less than 1 million.
Network equipment and software manufacturer Cisco Systems CSCO, -11.35% reported a decline in earnings and soft earnings guidance for the current quarter, and announced the head of the financial official retirement.
Conglomerate 3M MMM, said sales trends improved in July, and the manufacturer of expensive products TPR, -2.91%
Apple AAPL, + 1.20% is preparing a series of bundles that will allow customers to subscribe to some of the company’s digital services at a lower monthly price, according to a Bloomberg News report.
The US said tariffs on European Union products would remain unchanged, despite efforts by airline manufacturer Airbus to move in compliance with a decision by the World Trade Organization with state assistance.Also in the face of trade, a number of US companies have led the White House to the decision to ban the social-media app WeChat, according to The Wall Street Journal.
The markets
The S&P 500 SPX, + 0.04% is within the distance of a close closing record, and the US fut futures ES00, + 0.07%.
