JPMorgan Chase says de-dollarization will accelerate as central banks reduce USD reserves and aggressively accumulate gold.
Meera Chandan is co-head Global FX Strategy for JPMorgan. She says that the USD share at central banks has fallen to under 60%, which is a record low.
According to the bank, the real indicator of dedollarization or the reduction in reliance on USD as a global currency is the gold price.
JPM has noted a trend of gold sales from countries like China, Russia, and Turkey.
The main trend of dedollarization in FX reserve is the increasing demand for gold. As an alternative to highly indebted Fiat currencies, gold’s share in FX reserve has increased. Leading the way are emerging market central banks — China and Russia have been among the biggest buyers of the past decade.
This increased demand has in turn partly driven the current bull market in gold, with prices forecast to climb toward $4,000/oz by mid-2026. The increased demand for gold has also contributed to the current bullish market, which is expected to reach $4,000/oz in mid-2026 .”
JPM noted that there was a de-dollarization of the markets for bonds, noting the fact that foreign ownership of the Treasury Market has declined continuously over the past 15 years.
JPMorgan reports that the current percentage of Treasuries held by foreigners has fallen to 30% in early 2025. This is down from 50% at its highest during Great Financial Crisis.
Jay Barry, Head of Global Rates Strategy, says the Bank.
We must take into consideration what more aggressive actions could be. “Although the foreign demand for Treasurys hasn’t kept up with growth in the market over the past decade, it is time to consider the implications of more aggressive action. Japan alone owns more than $1 trillion of Treasuries or nearly 4 percent of the market. Any significant selling by foreigners would have a major impact on yields, pushing them higher .”
Analysts note that in early 1990s the dollar was a smaller share of FX reserves, suggesting the shift to other currencies such as the euro or yuan may be significant but is not unprecedented.
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