Former US President Donald Trump has taken to his social media platform, Truth, to express his growing concerns about the state of the US dollar. In a recent statement, Trump stated that he believes the Chinese yuan could potentially displace the US dollar as the world’s top currency.
Trump believes that this catastrophe will “probably” happen during Biden’s presidency. In a tweet, he said that the displacement of the US dollar as the world reserve currency would be the “biggest defeat” in the history of America, adding that it is happening quickly.
However, it should also be noted that several nations are currently steering away from the US dollar. Recently, the Malaysian Prime Minister also asserted that there is no reason to continue to depend on the US dollar. The Chinese yuan has already dethroned the dollar to become the most traded currency in Russia, and even the ASEAN nations are considering dropping out the dollar for settlements.
Trump’s concerns about the US dollar are not unfounded. Three congressmen recently introduced a “Gold Standard” bill to re-peg the currency to a fixed weight of gold bullion, protesting against Washington’s “irresponsible spending habits” and the “creation of money out of thin air”. This would help the US dollar regain a stronger hold.
The wider community seems to disagree with Trump’s opinion. A tweet from Fluent in Finance points out that the yuan only accounts for just over 2% of global reserves, while the US dollar accounts for around 60% of all foreign exchange reserves. This suggests that the yuan is not yet ready to displace the US dollar as the world’s leading reserve currency.
The recent decline in the value of the US dollar may be traced back to multiple factors, such as the slowdown in US manufacturing activity last month, renewed inflationary fears due to OPEC’s unexpected output drop, other macroeconomic challenges, and geopolitical tensions.
The US dollar’s future may seem cloudy, but it’s worth noting that it’s the reserve currency most countries have on hand, and the yuan has a long way to go before it can compete internationally due to political and economic factors. Trump’s worries about the dollar’s value are warranted, but whether or not the yuan will overtake the dollar as the world’s reserve currency is an open question.
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