USD will lose its leader status in the global economy, warns JP Morgan

Washington: JP Morgan, the leading financial institution in the world, warned that in the coming decades the global economy is set for some landslide changes and USD will lose its influence on the worldwide economy and the system with the influence of the Asian continent will take over as the leader. Only last month, former British Minister Jim O’Neill claimed that Chinese Yuan could become an alternative to the USD as a global currency. At the same time, US President Donald Trump asserted that the USD is the true global currency.

Craig Cohen, a leading strategist form JP Morgan, published an article presenting the investment policies titled ‘IS the Dollar’s exorbitant privilege coming to an end’. At the beginning of the article, Cohen warns that the USD could lose it status as the leading global currency. He claimed that the policy changes and the obstacles for economic growth would be the factors affecting this.

Cohen indicated that the currency replacing the USD will come from Asia saying ‘For the last hundred years, USD has been the main global Reserve Currency. In the thousands of years of world history, the leading currency also has seen consistent changes, and the USD influence also cannot be eternal. The centre of global development has shifted to the Asian continent since the last few decades, and the roles of India, China and south-east Asian countries has been vital.’

Cohen pointed out that since the recession around a decade ago, the Central Banks of many countries have reduced the Dollar percentage in their reserves and purchase of Euro and Gold has become a priority. The JP Morgan economist said that this is the first time since 1971, that the demand and purchase of Gold has gone up to record level. Cohen indicated that the value of the USD might possibly decrease because of the trade war at the international level and the increasing deficit in the US economy.

Cohen went on to advise the investors using the services of JP Morgan, to consider investing in currencies of countries other than the United States, like Europe, Canada, the United Kingdom, Japan and so on. JP Morgan is operational in more than 100 countries and has an asset base of more than USD 2 Trillion. JP Morgan is an investment banker for millions of companies and leading investors in the world. Therefore, the advice given by their economist becomes significant.

Since the last few months, Russian President Vladimir Putin as well as economists from the United Kingdom and Canada have repeatedly warned regarding the USD and have advocated alternative currencies. But now, the warning issued by the leading Bankers, JP Morgan, from the United States, regarding the status of the USD, becomes significant.