The global leading bank JP Morgan has predicted the future of the US dollar against BRICS member’s local currency, the Chinese Yuan (Renminbi). BRICS member China is advancing to dethrone the US dollar and replace the global reserve currency with the Chinese Yuan. China is taking several steps to keep the Renminbi on top of the US dollar making their local currency gain acceptance for global trade. The battle to make local currencies superior to the US dollar was kick-started by China through the de-dollarization initiative.
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BRICS: JP Morgan Predicts How the US Dollar Will Fare Against Chinese Yuan In The Future
JP Morgan’s Global Research published a report titled “De-dollarization: Is the U.S. dollar losing its dominance?.” Alexander Wise, who authored the report, said that the Chinese Yuan is a popular choice of payment for developing countries. He discussed BRICS, the Chinese Yuan, and China’s role as a whole in the downfall of the US dollar.
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“With China’s growth centrality in global commerce, one might naturally expect the Renminbi to assume a greater role in the global economy over time,” Wise stated. The analyst added that for the Chinese Yuan to overtake the US dollar, the Communist government needs to initiate more concrete steps to come out on top.
He added, “Relaxing capital controls, opening markets, implementing measures to promote market liquidity, bolstering the rule of law, reducing appropriation and regulatory risks, and promoting Chinese government bonds as a safe alternative asset- these could all cement China and the renminbi as a credible alternative to the US and the dollar.”
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Currently, China has not opened its markets and remains conservative in its approach. None of the mentioned points from the JP Morgan report holds water to China’s methods at the moment. Therefore, BRICS member China’s local currency, the Chinese Yuan, overtaking the US dollar might not be true in this decade.
Also, the US dollar remains the de facto global tender and other BRICS currencies don’t come close to the USD. In conclusion, the Chinese Yuan has a long way to reach the top, let alone dethroning the US dollar.