Economists have warned about the adverse impact of Fitch’s U.S. rating downgrade on the dollar. One expects the downgrade to “accelerate” the process of de-dollarization globally. Another stated that it may be “a part of the gradual decline of the U.S. dollar system.”
Impact of Fitch’s Rating Downgrade on US Dollar
Several economists have offered their perspectives on the adverse effects stemming from Fitch Ratings’ decision to downgrade the long-term foreign-currency issuer default rating of the United States from AAA to AA+. Fitch Ratings is one of the top three credit rating agencies in the U.S.
Citic Securities’ chief economist, Ming Ming, told the Global Times on Wednesday:
Amid the increasingly complex geopolitical situation today, more and more countries have started the de-dollarization process and Fitch’s downgrade of the U.S. rating may accelerate that process.
In response to Fitch Ratings’ downgrade, both the White House and Treasury Secretary Janet Yellen released statements expressing strong disagreement with the decision. Yellen asserted that the change was “arbitrary and based on outdated data” while officials from the Biden administration called Fitch’s downgrade decision “bizarre and baseless.”
A growing number of nations globally are actively working to decrease their dependence on the U.S. dollar, particularly after the U.S. weaponized its currency. Leading the efforts towards de-dollarization are the BRICS countries (Brazil, Russia, India, China, and South Africa). The economic bloc has been pushing for the use of national currencies in trade settlements. De-dollarization is expected to be among the major topics discussed at the BRICS leaders’ summit that will take place on Aug. 22-24.
“The negative effect of U.S. monetary policy on the world economy is very significant … some countries have been badly hurt by the U.S. monetary tightening,” Lian Ping, chief economist of Zhixin Investment, told the news outlet.
The chief economist added:
Fitch’s downgrade of its credit rating may also be a part of the gradual decline of the U.S. dollar system.
Do you think Fitch’s U.S. rating downgrade will hurt the U.S. dollar’s dominance? Let us know in the comments section below.
from Bitcoin News https://ift.tt/jmfqd15
https://ift.tt/GeXgMIQ
0 Comments