“Due to its widespread use outside the US borders, the fundamentals of the USD are much more complex than those of any other currency,” say analysts at Rabobank.
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“The heavy use of the USD as a billing currency around the world means that it continues to dominate the global payments system. According to the BIS, at least half of cross-border transactions are billed in USD. This explains the fact that, while US “The share of world trade has fallen in recent decades, the USD has retained its dominant position as a reserve currency, accounting for about 66% of the total.”
“In emerging markets, the attractiveness of the USD has resulted in a steady increase in the amount of debt denominated in USD, with issuance levels maintained through 2020. In addition, many households in emerging markets accumulate dollars as hedging against local currencies. volatile “.
“Fed estimates suggest that about 60% of all US banknotes in circulation are held outside the US In this case, the dollar acts more like an asset than a currency, and its value depends on the depth and liquidity of the USD markets. These examples support our view that, unlike other currencies, the outlook for the US dollar is based more on its own fundamentals than that of its issuing country. it remains central to our projections for the US dollar and contributes to our view that the dollar is set to remain on the front foot in the months ahead. “
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