Since its original rise to prominence in 1971, analysts have been warning of the dollar’s impending doom.
“We tend to think that nothing could ever dislodge the dollar from this preeminent status as the world’s currency,” said Stephen Roach, a senior fellow at Yale’s Jackson Institute for Global Affairs. “I think that view is overblown and ultimately will be challenged.”
But many experts believe that the U.S. dollar is far from the end of its reign.
“I think the chances of that happening in my lifetime are negligible,” said Kathy Jones, managing director at Schwab Center for Financial Research. “When we’ve seen concerns about events in the global economy, whether it’s the economy or geopolitical events, the dollar has gone up, not down. It’s seen as a safe haven.”
After bouncing back from the effects of the pandemic, the dollar has seen its value strengthen as the crisis in Ukraine deepens.
“When we get these moments of flight to safety, as we’ve seen with the outbreak of the war in Ukraine, the dollar has actually tended to go up as investors look to the most liquid and safest markets to put their money in,” Jones said.
U.S. markets also play a substantial role in retaining the health of the currency across the globe.
“A dollar collapse actually is quite unlikely because the implication of a dollar collapse is that you would have a real search for safety,” argued Eswar Prasad, a senior fellow at the Brookings Institution. “And the only really safe place to put lots of money remains the U.S.”
Watch the video to find out more about why the dominance of the U.S. dollar is likely to continue.
