After the dollar exchange rate fell 10%, the United States extended its currency swap with Singapore by 60 billion yuan! What's the purpose?

The dollar index is an important indicator that comprehensively reflects the strength of the dollar in the international foreign exchange market. On Wednesday, local time, the US dollar index fell to 93.42, and once fell to 93. 17, the lowest since June 2008. Prior to this, the dollar index has shown a downward trend. From 103.9 in March to 100 in May, and then to 97 in June, it has reached the lowest point in two years, with a cumulative decline of 10%.

Is the dollar falling again because investors have lost confidence in the dollar? This stems from the continuous release of easing signals by the Federal Reserve. On Wednesday, local time, the Federal Reserve announced that it would keep its easing policy unchanged to support the US economy hit by the epidemic. This means that the United States may also release liquidity to the market. After all, the epidemic in the United States is still very serious. According to the real-time statistics of Johns Hopkins University, as of the 29th, the cumulative number of confirmed cases in COVID-19 has exceeded 4.4 million, and the cumulative death toll has exceeded 6.5438+0.5 million, accounting for nearly a quarter of the world.

The downward trend of the US dollar and the Fed's insistence on monetary easing have led many international institutions and experts to point out that the US dollar may collapse. Stephen roach, an economist at Yale University, said that under the background of de-globalization, the US budget deficit is unprecedented and the national savings rate is low, so the future dollar crash is inevitable.

Jeffrey Jeffrey Gundlach, CEO of Double-line Capital, who is known as the "new debt king", believes that the sharp increase in fiscal expenditure in the United States to fight the epidemic will inevitably lead to a decline in the dollar; Once the dollar collapses, the dominant force of the United States in the international financial system will disappear. Goldman Sachs, a famous wall street investment bank, has a similar view.

Although these views are reasonable to some extent, we also need to see that the US dollar, as the preferred reserve currency, still plays a role in world transactions. The dollar is still the preferred currency for investors. Investors trade all kinds of assets in dollars around the world, and half of the global trade and two-thirds of the currency reserves are denominated in dollars.

The status of the dollar is related to its long-term "binding" to oil. If the dollar collapses in the future, it is probably because there is a currency that can replace the dollar, or there is an alternative international trading method.

During the epidemic, many countries actively held US dollars, which not only showed that some countries were still inseparable from the US dollar, but also supported the status of the US dollar in the international market to some extent. According to Korean media reports, on July 30th, the Federal Reserve agreed to extend the currency swap agreement with South Korea for six months, that is, the expiration date was extended from September 2020 to March 20021year. After the currency swap with the Federal Reserve, South Korea will get enough dollar liquidity to meet the needs of the local market.

At the same time, Singapore also announced that the Federal Reserve has agreed to extend the $60 billion currency swap arrangement with Singapore to March 20021,which will promote enterprises in Singapore and the region to obtain US dollar loans. Of course, the reason why Singapore and South Korea seek to exchange dollars is also related to their only recognition of dollars in market transactions.

Therefore, as long as the dollar plays a leading role in international transactions, the United States will abuse the monetary power of the dollar unscrupulously and pass on the inflation risk brought about by currency flooding to the whole world.

Text | Zhong Zhisheng | Deng Weijian | Rao Jianning | Yan Ge, liu ling