As US dollar risks losing dominance, investors need to diversify overseas: Globe and Mail

OTTAWA - The possibility of the US dollar losing its role as the world's reserve currency is deservedly getting a lot of attention of late, and investors should take heed, reported The Globe and Mail on Tuesday.

"This anxiety has been caused by the cultural and economic challenges the United States seems to be facing. China, Russia, India, and Brazil are actively looking to lessen the dominance of the greenback in international finance," said the report. "The US dollar's weakening position in global capital markets is the country's own doing."

It is because of decades of fiscal irresponsibility and anemic economic growth which was veiled by artificially low interest rates and the fact that the country controlling the world's reserve currency and primary medium of international exchange lowered the cost of borrowing, said the report. Furthermore, the US administration has chosen to weaponize the dollar, most recently by kicking Russia out of the international payments system and by confiscating its assets.

"Trust in the US and its currency has not been lost but it has been severely degraded over time as the country's debt levels have skyrocketed and its interest rates sank through quantitative easing policies," noted the report.

That said, the US dollar will remain a reserve currency for some time. Its decline has been and will continue to be gradual. Investors should look offshore to diversify their investment opportunities, it added.