Strong U.S. dollar lets Donald Trump call the shots

If a man was provided with enormous benefits by other people and he starts to turn them against those people, he is cutting his own throat. The U.S. willingness to stifle its opponents with economic sanctions, including cutting down on the dollar-denominated funding, encourages global quitting the U.S. dollar. Russia reduces the greenback share in its FX reserves, the EU claims buying European aircrafts for dollars by European companies to be nonsense, and China launches trading oil futures for the yuans. There are calls for giving up on the U.S. dollar all over the world. The championship jumping into a concrete wall can well finish at the selection stage.

Nowadays, U.S. dollar share in global payments is about 40%, the international credits – 56%, in central banks’ reserves -63%. The values have been declining during the last few years; however, the greenback still looks like the king. It is easy to penalize those, who don’t agree with the America-above-all policy. No matter how loud Russia and other countries are announcing De-Dollarisation, they won’t be able to implement it as they strongly depend on commodity exports. The prices for oil, gold and other commodities are in the US dollar. So it makes no sense to switch to settlements in rubles. Yes, Russia can introduce it with China, Turkey, or any other emerging market, but it will hardly do with the European Union. The tries to give up on USD are going to fail. After all, one should lose in such a way that nobody will remember about the winner later.

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The USA goes on living large. Beyond its means. For the U.S. a hundred-dollar note costs a few cents. All the rest have to pay the par value. The U.S. credibility, incredibly overestimated, perfectly represents the U.S. exorbitant benefits. The greenback is not a girl. So it doesn’t need to remember that no money will come just because everyone wants it. It comes, in fact! Both fans and opponents are bringing their money on a silver platter. Another matter is the Donald Trump’s protectionism can seriously shift the system that has been working for ages. When the leader of the free world starts targeting not only the enemies, but the friends as well; it becomes a matter of honor to get rid of dollars everywhere.

This will is especially strong in the countries, suffered from the U.S. economic sanctions and import tariffs. One may say that, if you dislike the result, do something different; but nobody seems to be willing to dance to the U.S. tune. Washington is going to face a really difficult war on multiple fronts; however, it must admitted that Donald Trump himself is responsible for that. Trump’s activities as the U.S. president just prove that only he himself claims to be a sensible man. Other countries can do nothing but put their trust in God. And keep their powder dry.


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Dollar Is Dare-Devil

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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