China seems ready to deliver a knockout blow to its major rival, the US dollar. Now it is the best time for the Chinese yuan to assert its strength since the American currency is gradually losing its ground. Over the past four months, the US dollar index has dipped by more than 10% against the basket of six major currencies. This can be a true warning sign for investors to revise their portfolios. In addition, the largest investment banks, including Goldman Sachs, point out that the current monetary policy of the Fed has largely dented investor’s confidence in the US dollar. The US Federal Reserve is aggressively easing its fiscal policy, thus putting the American currency at risk. Analysts at Goldman Sachs fear that the dollar is on the brink of losing its status as the world's reserve currency. At the moment, this is a bitter reality for the greenback. So it is hardly surprising that its major rivals have grabbed the chance to benefit from this. Thus, China is already trying to take advantage of the dollar’s weakness. For instance, more and more Chinese companies are cutting the share of the dollar in their international transactions. Besides, some of China’s companies listed on the US stock exchange decided to leave the country. However, it is the US who is responsible for creating such an unfavorable environment for its currency. Washington is constantly using the dollar as a tool for geopolitical pressure, imposing different sanctions and tariffs on other countries.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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