Oh, mon dieu! JPMorgan Chase cries, “De-dollarization is upon us, mes amis! 😱” as central banks bid adieu to USD and bonjour to gold! 💃
In a note so thrilling, it could’ve been penned by a French dramatist, Meera Chandan, co-head of Global FX Strategy at JPMorgan, declares that the USD’s share in central banks’ reserves has plummeted to below 60% – a deux décennies low, ni plus ni moins! 📉
The pièce de résistance of de-dollarization, or the reduction of dependence on the USD for global trade, is, of course, the gold market, according to JPMorgan’s sages. For who needs dollars when you can jingle-jangle with gold, n’est-ce pas? 💎
JPMorgan notes a forte trend in gold purchases from competitor economies like China, Russia, and Turkey – the nouveaux riches of the world, if you will. 🌟
“The main de-dollarization trend in FX reserves is all about the growing demand for gold, voyez-vous? Seen as an alternative to heavily indebted fiat currencies, gold’s share in FX reserves has increased, led by emerging market (EM) central banks – China, Russia, and Türkiye have been the largest buyers in the last decade, les grands acheteurs, if you will.
Overall, while gold’s share in FX reserves in EM is still relatively low at 9%, it’s more than double the 4% seen a decade ago – une augmentation formidable, indeed! The corresponding share for DM countries is much larger at 20%. 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 – une prédiction très optimiste, n’est-ce pas?”
JPMorgan also spotted a sign of de-dollarization in the bond markets, highlighting that the share of foreign ownership in the Treasury market has been en déclin continu for 15 years – a trend that’s as exciting as a French tragedy, bien sûr! 📊
The current share of Treasuries owned by foreign entities has dropped to 30% as of early 2025, down from its peak of 50% during the Great Financial Crisis (GFC) – a chiffre that’s as telling as a Molière punchline, oui! 😏
Says Jay Barry, head of Global Rates Strategy at the bank, with the gravity of a French aristocrat,
“Although foreign demand has not kept pace with the growth of the Treasury market for more than a decade, we must consider what more aggressive action could mean. Japan is the largest foreign creditor and alone holds more than $1.1 trillion in Treasuries, or nearly 4% of the market – une somme considérable, indeed! Accordingly, any significant foreign selling would be impactful, driving yields higher – une conséquence fâcheuse, to be sure.”
The analyst notes that the dollar’s share in FX reserves was lower in the early 90s, meaning the move toward other currencies like the euro or the yuan is significant but not yet unprecedented – a déjà vu, if you will. 😒
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2025-07-19 17:57