NYTIMES (Catie Edmondson) - Thousands of Miles From the Iran War, Asia’s Currencies Feel the Strain
Soaring oil prices and a surging dollar are testing Asia’s foreign-exchange reserves, which were built up after the 1997 crisis.
NYTIMES (Alan Rappeport) - How the U.S. Is Trying to Ensure the Dollar’s Dominance During Economic Turmoil
As the government has been devising plans to keep the dollar dominant, China has been making its own moves to increase global influence of the renminbi.
AXIOS (Neil Irwin) - How a swap line for Persian Gulf allies would break with the past
If the United States gets into the business of providing dollar liquidity to the United Arab Emirates and other Persian Gulf states battered by the Strait of Hormuz's closure, it will amount to a novel use of an old power. The big picture: The Federal Reserve used swap lines with foreign central banks as a key tool to calm global financial disruptions in periods of stress, starting in the early days of the global financial crisis in 2007. They were driven by Fed leaders' belief that dollar funding shortages worldwide risked blowing back to the U.S. banking system and economy. - The potential use to backstop Gulf states carries a more explicit geo-strategic role: seeking to reward and bolster key allies in the region. - Kevin Warsh, in…
NYTIMES (Alex Travelli, Choe Sang-Hun, Sui-Lee Wee and Jason Gutierrez) - Asia Is Getting Crushed Between Oil Prices and the Dollar
From India to Southeast Asia to South Korea, currencies are crumbling as governments race to secure fuel that is priced in American money.
NYTIMES (Eswar Prasad) - No, the Dollar Is Not Dying
The currency is stumbling, by many accounts. But the narrative is false.
AXIOS (Neil Irwin) - China eyes challenge to U.S. dollar dominance – but that's easier said than done
The last few years have exposed some of the fractures in a world currency system dominated by the U.S. dollar. China's leaders see an opportunity — but achieving it will likely prove easier said than done. The big picture: For all the gripes that nations around the world have about the United States' stewardship of the dollar, displacing the dollar would require China or any other potential rival to build infrastructure and make sacrifices that would be no easy feat. - For China, it would mean relaxing its strict controls on the flow of capital into and out of the country, an important tool of state power — and a contrast to the U.S., where dollars flow more freely. Driving the news: Published remarks by Chinese President Xi Jinping…
AI:Chinese President Xi Jinping is aggressively pushing for the renminbi to achieve global reserve currency status, as highlighted in recent ideological writings in Qiushi magazine. While Beijing aims to challenge U.S. dollar dominance to mitigate the impact of American sanctions used against adversaries like Iran and Russia, significant structural hurdles remain. Unlike the free-flowing U.S. financial system, China’s reliance on strict capital controls and its lack of transparent institutional frameworks prevent the renminbi from serving as a true alternative to U.S. Treasuries. Despite efforts to facilitate direct trade between emerging markets like India and China without using dollars, global investors continue to favor the stability…Open
AXIOS (Neil Irwin) - The economy's pressure relief valve: the U.S. Dollar
Massive fiscal deficits as far as the eye can see. The prospect of easy monetary policy even amid elevated inflation. America's role in the world is in flux. Something has to give, and that something is the U.S. dollar. The big picture: A drop in the value of the dollar against other major currencies — underway for the past year, with a new leg down in the last couple of weeks — is the market manifestation of a shifting economic landscape. - With strong economic growth and the AI boom, the stock market has remained robust. The prospect of additional Federal Reserve rate cuts has kept Treasury bond prices stable. - But on the currency markets, the dollar has been falling — with specific recent words and actions by the Trump…