Harvard Professor Says US Dollar Will Keep Its Crown

The US dollar is facing heat from local currencies that seek to uproot it from the world’s reserve status. Trump’s trade wars and tariffs are doing the damage, as emerging economies are seeking alternative currencies. To make things worse, the DXY index, which measures the performance of the greenback, is down more than 10% year-to-date. It is struggling to climb above the 98 level and has remained stagnant for eight months. Despite all of the negatives, Harvard Professor Gita Gopinath believes that the US dollar will keep its crown in global finance.

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Harvard Professor & Former IMF Economist Opines About the US Dollar’s Future Prospects

Gita Gopinath IMF Harvard
Source: IMF

Gita Gopinath, who served as the Chief Economist and Deputy Managing Director at the IMF from 2019 to 2022, rejoined Harvard as a professor in economics and opined that the US dollar’s supremacy will remain intact despite internal and external pressure. “The world is highly asymmetric,” she said. The professor explained that although local currencies are seeing an increase in trade, they are barely showing up in the forex markets.

Developing countries, many with advanced and bigger economies, are barely seeing their currencies used in reserves, trade, or finance. Instead, the Harvard professor said that the US dollar dominates the board and shapes global policies. She also stressed that the greenback can absorb market shocks while local currencies fail. The USD has faced the whiplash of the currency market for decades and still stands strong.

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Other local currencies will not be able to sustain this level of smack, which the market throws at regular intervals. Also, the acceptance of local currencies among emerging economies is not equal. While Russia accepts the Chinese yuan, China rejects the Indian rupee. In conclusion, the US dollar will remain king for many more years despite the odds, according to the Harvard professor.

  • Gita Gopinath
  • Harvard
  • US DOLLAR

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