Over the past few decades, it has become a conventional practice for textile workers to use the US dollar for foreign trade business. However, the various bizarre policies of the current US administration have almost offended all countries, causing global outrage and public resentment. The credibility of the US dollar has shrunk significantly, forcing people to plan ahead and look for alternative currencies other than the US dollar.
The US dollar index: Hit a three-year low
Following the collective decline of the three major US stock indices last week, on the morning of April 21st, Beijing time, US stock futures fell collectively. As of 14:00 on the 21st, Dow futures dropped by 0.93%, Nasdaq futures fell by 0.95%, and S&P 500 futures declined by 0.90%.
On April 21st, Beijing time, the US dollar index dropped sharply in the short term and fell below the 99 mark for the first time since April 2022. As of 14:00 on the 21st, the US dollar index stood at 98.36, down 0.87%. On January 13th of this year, the US dollar index broke through the 110 mark. As of now, the index has dropped by more than 10% cumulatively.
The market generally believes that the policies of the US government are undermining the international status of the US dollar and intensifying expectations of its depreciation. Within the Trump administration, it is believed that a strong US dollar is a burden for the United States, leading to distortions in the currency market and imposing an undue burden on American businesses and workers.
Some analyses further point out that whether the status of US dollar assets is weakened or lost will be the key to determining Trump's success or failure.
Goldman Sachs said that the US dollar is overvalued by 20%, and tariffs are undermining the core pillar of a strong dollar. This time it is a confrontation between the US and the world, so it is more similar to "Brexit" rather than the tariff friction in 2018.
Trump: The chairperson of the Federal Reserve can be asked to leave immediately
Recently, the US dollar index has declined, and there is even high-interest US Treasury bonds as support. However, it remains to be seen how long the high interest rates can last.
US President Trump said on the social media platform "Real Social" on the 17th that Powell should have cut interest rates like the European Central Bank did long ago. He is always "late and wrong" and "the sooner he leaves, the better". When answering media questions at the White House, Trump said, "If I want him to leave, believe me, he will have to leave soon. I'm not satisfied with him." The day before, Powell said that the Federal Reserve would not yield to political pressure. In the face of the complex economic situation brought about by the recent tariff policies of the Trump administration, the Federal Reserve would focus on combating inflation.
Powell was nominated as the chairperson of the Federal Reserve by Trump in 2017 and took office after being approved by the Senate. He was re-elected by President Biden in 2022 and his term will end in May 2026. He said last November that he would not resign voluntarily.
The current situation is that Trump needs the Federal Reserve to lower interest rates in order to deal with the upcoming 6 trillion US dollars of Treasury bonds, but Federal Reserve Chair Powell has firmly stated that he will not cut interest rates and will not resign. If Trump finds an opportunity to replace the chairperson of the Federal Reserve and the Fed chooses to cut interest rates, there is still room for the US dollar index to decline further.
The RMB has launched a "rapid offensive".
While the US dollar is falling, cross-border payments in RMB have picked up speed again.
On April 21, the People's Bank of China and others jointly issued the "Action Plan for Further Enhancing the Facilitation of Cross-border Financial Services in Shanghai as an International Financial Center", aiming to enhance the functions of the Cross-border RMB Payment System (CIPS) and global network coverage, further improve the facilitation of cross-border investment and financing, and promote high-quality economic development and high-level opening up to the outside world.
Before this, according to the announcement of the People's Bank of China on April 11th, the 13 countries of ASEAN + China, Japan and South Korea unanimously passed the legal arrangement for the use of RMB as capital contribution in the Chiang Mai Initiative.
In 2024, the CIPS system witnessed a staggering 175.49 trillion yuan in cross-border payments, with a growth rate of 42.6% directly pushing the volume of US dollar settlements out of bounds. When the White House threatened the world with the tariff stick, 128 countries queued up to put the RMB in their own wallets, and even the oil tycoons in the Middle East began to settle accounts with the "oil RMB".
According to domestic media Finance World, on April 14th, the international currency market was filled with a bloody smell - the US dollar index dropped below the 100 mark, 36 trillion US dollars of Treasury bonds were like hot potatoes with no one to take over, while the number of direct participants in China's CIPS system soared to 170 within two months, and 1,497 indirect participants were spread across 186 countries and regions around the world.
Against the backdrop of various unexpected policies of the current US administration, even the financial hegemony of the United States is no longer as solid as a rock. Perhaps one day, it will take a huge plunge due to a series of impulsive tweets, and even one day, it might introduce a policy that does not allow others to use it.
The time for collecting RMB when selling cloth overseas is getting closer and closer!
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