CICC: The global monetary order is expected to continue restructuring, driving the US dollar to maintain a long-term depreciation trend.

Golden Ten Data, April 13 - According to a research report by CICC, after the short-term factors boosting the US dollar fade, the narratives of a reconstructed global currency order and waning US dollar hegemony may once again dominate market direction. The continued accumulation of the US’s net external liabilities strengthens calls for US dollar depreciation; the high degree of policy uncertainty under Trump, and the unmitigated risk of “weaponization” of the US dollar, are also dampening demand for US assets in the market. If the “balance sheet reduction” policy advocated by the incoming Federal Reserve Chair Walsh can be implemented, it would objectively help restore confidence in the US dollar. However, Walsh’s policy is constrained by the resilience of the real economy, financial markets, and political considerations, while Trump’s foreign, trade, and economic policies continue to have a negative impact on the US dollar’s credibility. Taking into account the overall influence of both Walsh’s and Trump’s policies, there is no conclusive evidence that the credibility of the US dollar will improve in the future. We expect that the global currency order may continue to be restructured, supporting a long-term depreciation trend for the US dollar.