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De-dollarization Signs Are Emerging as the Greenback Slides in Currency Reserves, JPMorgan Says

RawNews1st June 8, 2023

De-dollarization Signs Are Emerging as the Greenback Slides in Currency Reserves, JPMorgan Says

While a near-term rupture in the greenback’s dominance is unlikely, divergence away from dollar usage is beginning to show, JPMorgan analysts wrote in a Monday note.

“Some signs of de-dollarization are emerging; this trend is likely to persist but USD should maintain its large footprint for the foreseeable future,” they said.

For now, the currency remains “top-of-class” in global transactions, and accounts for 88% foreign exchange volumes, while its share of trade invoicing has remained steady for two decades, between 40% and 50%.

However, this has been set against a decline in the US share of global trade, as the country’s exports fell to a record low of 9%.

And the dollar’s share of foreign exchange reserves has also dropped. That trend was accelerated after the West froze Russia’s $330 billion in reserves last year for its Ukraine invasion — prompting other nations to decrease their reliance on the US currency.

“De-dollarization is evident in FX reserves where USD share has declined to a record as share in exports declined, but is still emerging in commodities,” JPMorgan said.