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‘Dedollari$ation’

How a global currency shift may surprise investors 

The de-dollarisation series explores ongoing moves to erode dollar dominance and the shift to a multi-currency international monetary order.

After nearly seven years of a dollar up cycle, a global currency shift may surprise asset owners, who should be aware that the nature of the unfolding opportunity may well be a secular one, and not just a cyclical one.

De-dollarisation PDF download | Listen to Podcast

 

De-dollarisation
The fast view

Philip Saunders, Russell Silberston, Mike Hugman & Sahil Mahtani

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Exploring the history of US dollar dominance

Philip Saunders, Russell Silberston, Mike Hugman & Sahil Mahtani

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Why the US dollar remains centre stage

Philip Saunders, Russell Silberston, Mike Hugman & Sahil Mahtani

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What is driving de-dollarisation?

Philip Saunders, Russell Silberston, Mike Hugman & Sahil Mahtani

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The next global currency shift

Philip Saunders, Russell Silberston, Mike Hugman & Sahil Mahtani

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The global currency shift:
A changing investment landscape presents compelling opportunities

The US dollar has dominated financial markets in the post-war period, but countries across the globe are increasingly taking steps to reduce dollar use in trade and finance. While the global currency shift is likely to be gradual, the emergence of a multipolar monetary order will have a profound impact on markets and portfolios. After seven years of a dollar up cycle and a de-rating in emerging market assets, the opportunities unfolding could be structural rather than purely cyclical.  Now is the time to reassess the case for emerging markets – not only as an allocation with the potential to deliver attractive risk-adjusted returns over the medium term, but also as a long-term structural holding within a broader portfolio.  

In addition, China is on course to become a major constituent of global equity and bond markets. Investors who allocate to emerging market assets should consider a separate allocation to China.  The country is producing a growing number of world-class companies that are ideally positioned to penetrate China’s huge consumer market. Aside from sheer size and relevance, we also believe that investors will increasingly favour Chinese bonds because of their potential to significantly enhance overall portfolio risk-adjusted returns.   Financial market liberalisation and the role of the renminbi in world currency markets will increasingly be a key focus for investors.  Our research looks at how the next currency transition will transform the investment landscape.  We trust you find our views insightful. 

Rongrong Huo
Head of the Investment Institute

Rongrong Huo
Return to Investment Institute

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