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29 May 2024
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Chinese Yuan Will Never Outpace The US Dollar, Analyst Predicts

The US dollar has always been a topic of serious discussion among analysts. While several experts are busy predicting its fall, some analysts are vying for the USD’s new pace, labeling the currency as the best available option among its competitors. 

Joining the pro-USD league, experts from Morgan Stanley, a leading financial institution, have shared a new analysis, stating that the US dollar will be hard to subdue and dominate.

Also Read: Currency: What To Expect From The US Dollar Today 

US Dollar’s Equation With Chinese Yuan

us dollar king vs brics local currency
Source: thuancapital.com

China has long been trying to subdue the US dollar dominance on a global scale. The nation has already expedited efforts to challenge the US dollar’s supremacy by conducting trade alliances in local currencies. China and Russia have recently carried out $260 billion worth of trade in Yuan and Ruble,  leaving USD out of the trade proceedings. 

With the rise of multipolar currencies and the formation of BRICS, several countries have now risen to the occasion, challenging the USD’s prestige. The BRICS nations are also working on developing an independent currency. This blockchain-based currency is said to directly challenge the US dollar’s hold all over the world while derailing its momentum.

At the same time, the US economy and its eroding economic parameters are also fueling the USD’s degradation on a global scale. The swelling US debt metrics project a wobbly stance, which in turn is impacting the United States’ prestige as a robust economy. 

However, in a recent report, Morgan Stanley analysts have shared a rather astounding analysis, claiming that the US will thrive despite the current odds gnawing at its door.

Also Read: Russia & India Settle $4 Billion Trade in Rupee, Ditch US Dollar

Chinese Yuan Will Do No Harm To The US Dollar. 

According to Morgan Stanley’s head of FX strategy for emerging markets, James Lord, the Chinese Yuan will never be able to uproot the US dollar. Lord explained his reasoning behind this bold claim, stating that the Yuan is not liquid enough to challenge the USD global power dynamics.

Stating crucial facts, Lord reiterated how Beijing’s strict control over its currency flow may thwart efforts to outpace the US dollar. 

“It seems unlikely to challenge the US dollar meaningfully anytime soon. To do so, we think China would need to relax control of its currency and open the capital account. It doesn’t seem likely that Beijing will want to do this anytime soon,” Lord said.

At present, the Chinese economy is undergoing a stark real estate crisis. The Chinese housing market has plummeted to new lows, denoting signs of distress running amuck in the narrative. 

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