The dollar "doesn't have quite the pull it used to," Paul Gruenwald, S&P's chief economist, said at a conference hosted by the ratings firm in London.
"There's a fragmentation around the edges".
Gruenwald pointed to a number of examples where countries were now circumventing the dollar, "We've got other things happening outside of the dollar world".
He cited the rise in trade done in China's yuan and the cheap financing offered by China-headquartered development banks such as the Asia Infrastructure Investment Bank and the New Development Bank, formerly known as the BRICs bank.
"The US dollar will continue to be a leading world currency, but it will no longer be the dominant world currency," Gruenwald said.
US dollar sank to a two-month low against its major peers on Wednesday in the lead-up to a key US inflation reading, while sterling scaled a 15-month top on expectations the Bank of England (BoE) has further to go in raising rates.
US inflation data is due later on Wednesday, with expectations core consumer prices rose 5% on an annual basis in June. The figures should also provide further clarity on the Federal Reserve's progress in its fight against inflation.
Ahead of the release, the US dollar fell to a two-month low against a basket of currencies, extending its losses from the start of the week after Fed officials said the central bank was nearing the end of its current monetary policy tightening cycle.
No comments:
Post a Comment