The dollar has been used as the reserve currency for years. However, with the latest yen-yuan currency accord, there has been industry speculation over the future and the role of the dollar.
Following Japan and China’s currency and trade pact, several commentaries have surfaced analyzing the currency outlook for 2012.
In an editorial piece, China-Japan Currency Deal Points Way to a New World Monetary Order, Bloomberg argues that while the “immediate practical significance is limited, yet the deal signals that a deeper transformation is under way -- and one that the world should welcome.”
In particular, the Bloomberg team holds the view that pact will help nudge the yuan towards its “inevitable status as a global reserve currency alongside the dollar, yen and euro.”
(cont.) A grown-up yuan means a more stable world economy, which would hugely benefit the U.S. In any case, China’s size and vitality assure both its geopolitical strength and the yuan’s eventual standing as a global currency. Resistance is pointless.
On the other hand, MarketWatch’s editor-in-chief, believes “2012 to be the year of the dollar,” arguing that currency wars favour the greenback.
While David Callaway doesn’t touch on the yuan and yen, he predicts the death of the euro, adding that “the idea of the euro’s emergence from the crisis as a strong reserve currency is now indefensibly out the window.”
What is your currency outlook for 2012? Tell us below.