For many years the US dollar has dominated the world’s currency markets, acting as an international reserve currency. At one point it was thought that the euro would come to challenge the US dollar, but to date no alternative reserve currency has yet proved credible. Now today, against a backdrop of deglobalisation, geopolitical crisis and a new inflationary regime, the dollar’s status as a “safe” asset is being put to the test. The focus has turned to China, a much bigger player than Europe on the global stage. Has the time come for the renminbi to emerge as a viable alternative to the dollar?
Tristan Perrier, economics insight specialist at the Amundi Institute, explains some of the shifts and misalignments that have been occurring in the global currency order and whether we should expect countries to respond with coordinated or competitive currency intervention. He also talks about what a new global FX system could look like over the longer term and how the shifting patterns could ultimately impact investors.
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