China announced November 9th, 2015 that it will now allow for direct trading of the yuan with the Swiss franc. This brings the number of currencies that can be exchanged (outside of the US dollar) to six. Previously, the Chinese currency could be traded directly with only the Australian and New Zealand dollar, the British pound, the Japanese yen and the euro.
This continues a slow, but steady erosion of the United States dollar’s revered status as the world’s reserve currency. This internationally-envied position has been one of the keys to U.S. financial supremacy for 70 years. Reserve currency status has allowed U.S. administrations to spend indiscriminately as those leaders knew other countries would always buy up excess United States debt in order to have dollars to execute commerce themselves. For decades, our government knew all they had to do to satisfy any campaign, financial promise was to turn on the printing presses where a limitless supply of dollars existed.
If this migration away from the US dollar as the world’s only reserve currency continues, and every indication says it will, eventually only having or transacting business in dollars will leave you and your business vulnerable to wild moves in dollar valuation…and devaluation. Having alternative currency reserves in your portfolio, even if it is only $5K to $25K, will ensure you will still be able to trade good and services with other local business owners should something traumatic happen to the dollar. Diversification is the wise investor’s creed. Let Global X help you continue to sculpt your reserves so you are ready for the next set of rainy days to come.