Core Insights - The ultimate value of currency is determined by its ability to exchange for tangible goods, with the dollar's status as a world currency reliant on global dependence, while the rise of the yuan is linked to the global reliance on "Made in China" products [1][3][4] Group 1: Currency and Economic Power - The future of the dollar's dominance is at risk if the U.S. fails to rebuild its industrial base, while the yuan could become a true global currency if China continues to prioritize its real economy and technological leadership [3][10] - Historical context shows that the strength of any currency is closely tied to the industrial power and global trade networks backing it, with the dollar's post-WWII dominance rooted in the U.S.'s industrial output and gold reserves [4][6] - The decline of U.S. industrial strength, with manufacturing's GDP share dropping from 30% in the 1950s to 10% today, poses a threat to the dollar's status [4][6] Group 2: The Rise of the Yuan - The yuan's rise is supported by China's robust manufacturing sector, which accounts for 30% of global manufacturing and leads in the production of key goods, creating a strong demand for the yuan [6][9] - Recent trends indicate a shift towards de-dollarization, with countries like Russia and Saudi Arabia exploring non-dollar transactions, highlighting the yuan's potential as an alternative currency [9][10] - The internationalization of the yuan is accelerating, with significant increases in cross-border payment volumes and its share in global trade rising from 1% to 6% over the past two decades [6][9] Group 3: Future Currency Competition - The competition between currencies will fundamentally be about industrial capacity and trade networks, with the dollar needing to refocus on its real economy to maintain its position [10][11] - The yuan's internationalization depends on China's ability to sustain its industrial advantages and drive technological innovation, which will enhance the yuan's global influence [10][11] - The essence of currency is trust, rooted in material value, indicating that the future of currency will be determined by who controls the production of goods [10][11]

Core Viewpoint - The article discusses the current state of global currency payments, highlighting the dominance of the US dollar, the challenges faced by the euro, and the recent decline of the renminbi in international payment rankings [3][5][20]. Group 1: US Dollar Dominance - The US dollar maintains a dominant position in global payments, accounting for 49.08% of the total, which is a new high in eight months [8]. - Despite calls for "de-dollarization," many countries continue to increase their dollar reserves, particularly for commodities like oil and grains [10]. - The dollar's stronghold is attributed to historical factors, including its establishment as the world's reserve currency post-World War II [10][12]. Group 2: Euro's Challenges - The euro holds the second position in global payments with a share of 22.24%, but this figure has been declining, indicating underlying economic issues within the Eurozone [14][18]. - Recent data shows a drop in the euro's payment share from 22.29% to 21.93%, raising concerns about its stability [18]. - Internal conflicts within the Eurozone, such as differing fiscal policies among member states, contribute to the euro's precarious position [16]. Group 3: Renminbi's Decline - The renminbi's share of global payments fell from 3.89% to 3.50%, dropping from fourth to fifth place behind the yen [20][30]. - Despite a reported 8% increase in exports, a significant 20% drop in exports to the US has negatively impacted renminbi settlements [22]. - The renminbi's international payment status is still unstable, with its risk-bearing capacity being questioned [22][24]. Group 4: Future of Currency Competition - The article suggests that the future of currency competition may not solely rely on traditional systems like SWIFT, as alternative payment networks and digital currencies are emerging [26][28]. - China's digital renminbi and other national payment systems could potentially bypass traditional frameworks, reshaping the global payment landscape [28]. - The ability to establish a new payment ecosystem will be crucial in determining which currency can dominate future transactions [28].

Core Points - The US dollar has dropped 2% this week, marking the largest weekly decline since April, amid rising concerns over the US fiscal situation [1] - The dollar's decline is unusual given the high interest rate environment, as typically higher yields would attract investment in dollar assets [1] - The Bloomberg Dollar Index fell significantly, breaking below April lows and reaching a new yearly low [1][4] Group 1: Market Reactions - Investors are exhibiting panic selling of dollar assets, indicated by simultaneous declines in the dollar, US government bonds, and stocks [1] - Chris Turner from ING highlights ongoing concerns about the quality of US asset markets and threats of de-dollarization putting pressure on the dollar [1] - US Treasury Secretary Mnuchin attempted to downplay the dollar's weakness, attributing it to strength in other currencies rather than a decline in the dollar itself [1] Group 2: Fiscal Concerns - The fiscal deficit concerns stemming from Trump's tax cuts have led to a sell-off in long-term US bonds, with the 30-year bond yield rising 0.13 percentage points to surpass 5% [5] - Analysts warn that worries about the increasing fiscal burden on the US are gradually intensifying [5] - MUFG's Lee Hardman states that renewed concerns about the US fiscal outlook and speculation about weakening the dollar in international discussions are exacerbating the sell-off [7] Group 3: Long-term Outlook - The ongoing decline of the dollar is linked to growing investor concerns about the impact of comprehensive tariffs on the US economy [7] - RBC Asset Management analysts predict that the dollar's weakness will persist as investors seek to hedge dollar exposure in the short term and reconsider structural overexposure to the US in the long term [7]