This month’s huge sell off correlates with the value of US Dollar appreciating

This month’s huge sell off correlates with the value of US Dollar appreciating

By Greenchic | Investing and Trading | 22 Mar 2020


 

us dollar - world currency reserve
 Crowd sold off assets and acquired US Dollars


The huge sell off that occurred across all asset classes recently reveals definitely that everyone wanted cash in their hands by selling out stocks, gold, bonds ,BTC, and alt coins even at a loss. However, I got another fascinating insight, by watching Data Dash’s youtube channel video yesterday. Here Nicholus Mertin explains with data that people are provably flocking to put their funds in the US Dollar, as a safe haven.

You can watch this episode here - https://youtu.be/GTDohIVUkZk

People consider US Dollar as safe haven now

This sounded weird because gold fell hard, and that generally has a universal safe haven status. However, US Dollar is the World Reserve Currency, it’s strongest currency right now still.

 

gold falling

 

See the gold has declined to US dollar, if I am reading this graph right.

euro falling compared to us

Euro loses value against US Dollars , if I am reading this graph right.

 

What this means is that the US dollar has an upper hand as countries all over the world store US Dollars as their foreign exchange reserves.

 

liquid money in demand

Therefore, the US Dollar is the currency of the global economy, it is significantly used in international transactions and investments. US Dollar is also considered a safe haven currency.

 Explanation on wikipedia on world reserve currency
“A reserve currency (or anchor currency) is a foreign currency that is held in significant quantities by central banks or other monetary authorities as part of their foreign exchange reserves. The reserve currency can be used in international transactions, international investments and all aspects of the global economy. It is often considered a hard currency or safe-haven currency.”
https://en.wikipedia.org/wiki/Reserve_currency
 However, US dollar may lose it’s World Reserve Currency status

I found this really interesting. However, analysts are predicting that the US Dollar would cease to be a World Reserve Currency as it’s in the threat of losing this status. The reason for this mostly is that the US has a lot of fiscal deficit, too many debts that the country can’t pay back. The bond market there I think is giving negative yielding returns and very soon US banks may start giving negative interest rates to it’s depositors.

 US Banks on the verge of giving it’s depositors negative interest rates!!

The latter is because of constant repo rate cuts, with banks encouraged to make loans cheap at the cost of cutting the interest yield of depositors. Currently US depositors I read are almost earning nill interest for the money they deposited in banks. When they start losing value of their deposit amount when negative interest rates kicks in, that maybe the time when the US dollars may lose it’s status of being a world reserve currency. It would be accompanied by repercussions world wide, as US dollar forms the foreign reserve portfolio for all countries of the world.


These days there are lending companies like Celcius, that give attractive interest on deposits of stable coins and crypto!! So there are alternatives to keeping money in banks for sure.

celsius



 

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Greenchic
Greenchic

I love to write on things I am passionate about - environment, citizens activism, crypto and life in general. I am a cat enthusiast, nature lover. I am excited to engage at the Publish0x platform by reading and writing crypto and other content here.


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