Last updated on August 8, 2023
Financial experts are warning about the potential negative impact of Fitch Ratings’ recent downgrade of the United States’ long-term foreign-currency issuer default rating on the US dollar. They believe that this downgrade could hasten the global process of de-dollarization, with some suggesting that it may even be a part of a larger decline in the dominance of the US dollar system.
Citic Securities’ chief economist, Ming Ming, stated that the current geopolitical situation has prompted many countries to initiate the de-dollarization process, and Fitch Rating’s downgrade of the US rating could further accelerate this trend.
In response to Fitch Ratings’ decision, the White House and Treasury Secretary Janet Yellen issued statements expressing their strong disagreement. Yellen argued that the downgrade was arbitrary and based on outdated data, while Biden administration officials described it as unfounded and strange.
De-dollarization efforts are underway in many countries worldwide, particularly as a result of the US weaponizing its currency. The BRICS countries, which include Brazil, Russia, India, China, and South Africa, are at the forefront of this push for de-dollarization, advocating for the use of national currencies in international trade. The upcoming BRICS leaders’ summit in August is expected to address de-dollarization as one of its main topics.
Lian Ping, chief economist of Zhixin Investment, emphasized the significant adverse effects that US monetary policy has on the global economy. He also suggested that Fitch Ratings’ credit rating downgrade may be indicative of a gradual decline in the US dollar system.
Overall, there are concerns among economists that Fitch Ratings’ downgrade could further erode the dominance of the US dollar. The long-term implications of this downgrade and the resulting de-dollarization trend remain to be seen.
Keyphrases: Fitch Ratings, US rating downgrade, de-dollarization, global de-dollarization, US dollar dominance
Hashtags: #FitchRatings #USDollar #DeDollarization #GlobalEconomy
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