The worldwide head of country risk at Fitch Solutions has explained why the hegemony of the US dollar is being weakened, citing the increasing adoption of cryptocurrencies, de-dollarization efforts by BRICS countries, and the growing economic strength of China.
Expert Highlights Reasons Behind US Dollar Erosion
Cedric Chehab, the global head of country risk at Fitch Solutions, discussed the diminishing power of the US dollar in an interview with CNBC. Fitch Solutions specializes in providing financial services and is part of the Fitch Group, which is a major player in the field of credit ratings and research.
The analyst noted that the decline of the dollar will occur slowly and not all at once, saying:
We’re gonna see that dollar dominance erode over time.
Chehab then went on to outline three key reasons for the weakening of the US dollar. Firstly, he pointed to the rising economic power of China and its increasing influence on international finance, trade, and other matters. Secondly, he drew attention to the de-dollarization efforts of Russia, BRICS, and ASEAN countries, who are all seeking to reduce their reliance on the US dollar. BRICS is an association of Brazil, Russia, India, China, and South Africa, while ASEAN is made up of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
The Fitch Solutions analyst also highlighted the rise of cryptocurrencies and central bank digital currencies, which he said could lead to “less use of general currencies”. These, he suggested, could have a tangible impact on the US dollar.
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