Discuss about the different financial investment options, financial markets, common investment products and what is trending in the market.
-
smoulder
- Editor
![Editor Editor]()
- Posts: 1423
- Joined: Fri, 25 Dec 2015 11:05 pm
-
Quote
-
0
login to like this post
Post
by smoulder » Mon, 14 Oct 2024 10:43 am
Recently, my news feed has been increasingly filled with news articles about this. I haven't yet researched fully what it is, how real it is and if so what are it's impacts but my initial thoughts are that it is largely centering around BRICS with occasional talk about using an alternative currency for trade or foreign currency reserves.
Why Russia would talk about it is obvious. How seriously would I take Russia that has become a pariah nation - not very. China is an economic heavy weight but also increasingly at odds with the western world, but that in itself couldn't be a reason why they couldn't champion the cause of the global south. India is a big economy and still developing but still not able to pack a big punch like China. Having said that, my thought is that since BRICS is to a large extent India and China, they are not going to agree on a common currency given the state of the relationship between the 2 nations. So that itself dilutes any attempts by this group to reduce the importance of the dollar. In my opinion.
However, I'm pretty sure that I'm far from an expert on the matter. As someone who has placed a great deal of faith in the US economy which is reflected in my investments, should I be concerned about de-dollarization?
-
malcontent
- Manager
![Manager Manager]()
- Posts: 2963
- Joined: Sat, 22 Dec 2007 11:52 am
-
Answers: 9
- Location: Pacific Rim
-
Quote
-
1
login to like this post
Post
by malcontent » Thu, 30 Jan 2025 11:40 am
smoulder wrote: ↑Mon, 14 Oct 2024 10:43 am
Recently, my news feed has been increasingly filled with news articles about this. I haven't yet researched fully what it is, how real it is and if so what are it's impacts but my initial thoughts are that it is largely centering around BRICS with occasional talk about using an alternative currency for trade or foreign currency reserves.
Why Russia would talk about it is obvious. How seriously would I take Russia that has become a pariah nation - not very. China is an economic heavy weight but also increasingly at odds with the western world, but that in itself couldn't be a reason why they couldn't champion the cause of the global south. India is a big economy and still developing but still not able to pack a big punch like China. Having said that, my thought is that since BRICS is to a large extent India and China, they are not going to agree on a common currency given the state of the relationship between the 2 nations. So that itself dilutes any attempts by this group to reduce the importance of the dollar. In my opinion.
However, I'm pretty sure that I'm far from an expert on the matter. As someone who has placed a great deal of faith in the US economy which is reflected in my investments, should I be concerned about de-dollarization?
I realize it’s been a while since you posted this, but just wanted to respond to that last bit. As an investor in equities, you aren’t sitting in dollars despite the stock prices being reflected in that currency. When you own stock in a company, you own shares which are underpinned by the earnings of the company. The only question is how a weak dollar would impact company earnings. If the company’s costs and revenue are both in USD, they have a natural hedge which should not impact earnings significantly. If the company’s manufacturing costs are in a weaker USD, to the extent they export, that will boost earnings. The biggest risk is where the company manufactures outside the U.S. and imports to the U.S., but even in that case, the most likely course of action is to raise prices in USD to protect earnings. Overall, I think owning stocks are a great hedge against both currency devaluation and high inflation.
It is impossible for a man to learn what he thinks he already knows - Epictetus
-
NYY1
- Reporter
![Reporter Reporter]()
- Posts: 798
- Joined: Mon, 21 Mar 2022 10:41 pm
-
Answers: 4
-
Quote
-
1
login to like this post
Post
by NYY1 » Thu, 30 Jan 2025 12:32 pm
De-dollarization, if it ever happens, would be something that is greatly different than the 10%-30% fluctuations we see in major currencies and the associated impact on earnings.
Second, not everyone is a USD based consumer. US stocks (the big indices) have foreign profit streams that will be worth more dollars if the USD declines. At the same time, if the dollar declines, the USD revenues - costs = profit streams will be worth fewer Euros, Rupees, Renminbis, Singapore Dollars, etc. Most likely, the US indices are still net long the dollar.
-
Max Headroom
- Reporter
![Reporter Reporter]()
- Posts: 966
- Joined: Wed, 08 May 2013 11:31 am
-
Answers: 1
- Location: Singapore
-
Quote
-
1
login to like this post
Post
by Max Headroom » Fri, 31 Jan 2025 10:21 am
smoulder wrote: ↑Mon, 14 Oct 2024 10:43 am
As someone who has placed a great deal of faith in the US economy which is reflected in my investments, should I be concerned about de-dollarization?
Once the de-dollarization scales approach 50%, I think everybody will be in doodie, not just peeps long US. There's no way, such a tectonic shift will happen without a decent spell of global turbulence.
The good news is that it's still a ways off, in opinion. The bad news is that it will continue to grind on at a glacial pace, until it suddenly happens all at once, probably during a black swan.
Bottom line: Yeah, I reckon it's something we should be concerned about.
Users browsing this forum: No registered users and 2 guests