King Dollar not dead yet

The US dollar still makes up nearly 62% of all official global foreign currency reserves, according to the latest data from the International Monetary Fund. The euro is a distant second and the Chinese Remnimbi, for all the storm and bother, is not really in the conversation.

At $6.75 trillion, third-quarter dollar reserves are actually down from the second quarter at $6.78. One interesting market to watch for 2020 is the market for dollar-denominated debt in emerging markets that must be refinanced either this year or in the coming years. Why?

Governments and corporations in emerging markets borrowed in dollars abundantly in the last decade. It was cheap (low interest rates). And there was plenty of liquidity available. It’s still cheap. But the troubled repo market in the US suggests dollar liquidity may be a problem in 2020. Stay tuned…