The U.S. dollar is facing stiff competition from BRICS countries who want to dethrone it bitcoin from the global reserve status. BRICS kickstarted the de-dollarization initiative convincing developing countries to use local currencies for global trade and not the U.S. dollar. The development is adding pressure on the U.S. dollar making it hard to find resistance in the international currency markets.
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However, leading global bank HSBC provided insights about the U.S. dollar’s prospects against the onslaught of BRICS local currencies. Read here to know how many sectors in the U.S. will be affected if BRICS ditches the dollar for trade.
BRICS: HSBC Predicts U.S. Dollar’s Prospects In the Months Ahead
HSBC published the latest report outlining how the U.S. dollar could fare in the coming months against other local currencies, including that of BRICS nations. According to HSBC, the U.S. dollar is most likely to remain strong in the coming months and outperform leading currencies.
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Economists at HSBC wrote in their report that the U.S. dollar could outperform the Euro and the Pound Sterling. However, they provided caution saying that the U.S. dollar might underperform against the Japanese Yen, Canadian Dollar, and Australian Dollar.
HSBC economists explained that the U.S. dollar “has not run out of gas yet” and could punch above its weight in the coming months. “The U.S. Dollar will not be strengthening against most other currencies like it did when the Fed was in a rapid hiking cycle, but it has not run out of gas yet”.
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The report added, “We expect the USD to outperform the Euro (EUR) and the Pound Sterling (GBP), but to underperform the Japanese Yen (JPY) and some commodity currencies, like the Canadian Dollar (CAD) and the Australian Dollar (AUD).”
In conclusion, HSBC predicts that the U.S. dollar has more upside and will not be trampled by BRICS local currencies. The USD remains the de factor global currency for all business initiatives, trade, and commerce across the world.