This year, the global currency market has been in chaos, and has the critical moment to overthrow the dollar's dominance finally arrived?

There is no clear answer to this question yet, but the recent market trends have become increasingly bizarre. The Chinese yuan and the Japanese yen have once again faced a wave of depreciation. What is the reason for this? What forces are driving it? If the dollar falls, who will be the new king?

This year, the global currency has shown a trend of global chaos. Let's briefly summarize it so that everyone can see more clearly.

Historically, every time the dollar faces a crisis, the global currency market is not easy, and this year is no exception.

The current problems with the dollar are obvious. On the one hand, the three pillars of the dollar, U.S. debt, oil, and the U.S. military, are all facing crises.

On the other hand, the global trend of de-dollarization is rising, and it shows a continuous acceleration.

Global de-dollarization is not about anyone trying to overthrow the dollar, but it is caused by the dollar's own problems, mainly two issues.

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The first issue is that when the dollar raises interest rates, global trade lacks dollars, and everyone is forced to find a way out. Settlements in local currencies and other international currencies such as the euro, pound, and yuan have become alternative options.

The second issue is that the United States arbitrarily wields the stick of sanctions, causing damage to the dollar assets of many countries and individuals, and even confiscation. To avoid risks, many people have to reduce their holdings of dollar assets.

These issues are very serious. Entering 2024, the crisis has accelerated, and two sudden events have had a significant impact.The first matter is that in order to protect itself and exert pressure on its main competitors, the United States has initiated a large-scale currency war in Asia, resulting in a sharp devaluation of the yen and a decline in other major Asian currencies.

At present, this matter is not over yet, and the United States has not achieved its goal. They continue to exert pressure, but have transformed the short-term force into a long-term and sustained increase in pressure, which is equivalent to striking a hammer first and then attacking continuously at a low intensity. The effect is very good.

The second matter is that Saudi Arabia will not renew the petrodollar agreement, which has a very far-reaching impact, especially the blow to confidence in the US dollar is very heavy.

Some people say that the petrodollar agreement does not exist, which is a false news.

This perception is obviously too shallow. In fact, the agreement does exist, but it is not as direct as everyone imagines, or it is not a strict sense of the petrodollar agreement.

The United States has formed a petrodollar system through implicit agreements and frequent threats and pressures on Saudi Arabia, which is a real existence.

Now Saudi Arabia says that we will not sign any agreement, which means that the United States' threats and pressures have also lost their foundation, and the petrodollar system will gradually collapse.

Therefore, not renewing the petrodollar agreement is a fatal blow, coupled with the attack of the Houthi armed forces on the US aircraft carrier, the myth of the US military and the US dollar has been broken, which is a fatal matter.

I am afraid that the United States can only win back its reputation by fighting a fairy battle like in 1991, but does the United States still have that strength at present?

Some people say, you say the US dollar is facing a series of crises, but recently it has strengthened instead, and the US dollar index has risen to about 105.8. How to explain?The reasons behind this are complex, with the main factors being the interest rate cuts of the euro, Canadian dollar, and the currencies of several European countries. The British pound is also expected to cut interest rates, which has driven the US dollar to strengthen.

This global wave of interest rate cuts has widened the interest rate gap between the US dollar and other currencies, further directing US dollar capital towards the United States, making the short-term strengthening of the US dollar inevitable.

This has also led to further depreciation of the Japanese yen, which has once again approached 160, showing a trend that is hard to stop.

The Chinese yuan has also been dragged down in value, depreciating from around 7.20 in mid-May to the current level of around 7.26.

Some people believe that this is because we have allowed the yuan to depreciate, as it is beneficial for exports. The rationale is that our exchange rate is not a fully open market, and if we do not want the yuan to depreciate, it would be difficult for it to do so.

This perception is actually incorrect. The Chinese yuan's exchange rate is pegged to a basket of currencies, including the US dollar, euro, yen, and others.

With more US dollar capital flowing into the United States and signs of foreign capital outflow, some people sell yuan to buy US dollars. At the same time, other major currencies are also depreciating, which continuously increases the pressure for the yuan to depreciate.

Therefore, it is a normal phenomenon for the yuan to depreciate along with other major currencies against the US dollar.

Another question is, the US dollar seems very dangerous now, who will replace the US dollar and become the new king in the future?

At present, it seems that no other currency can replace the US dollar in the short term. At least the US dollar system cannot be replaced by any other system. Establishing a new monetary system requires a long-term process.So, the US dollar will continue to be weakened, and the world's struggle with the US dollar will be a long process, perhaps taking more than 10 years.

The final outcome is likely to be the establishment of a new stable structure for the world's currency, possibly a multilateral currency pattern based on a tripartite balance. These three major currencies, at present, are likely to be the US dollar, the euro, and the renminbi.