China is one of the United States’ fiercest competitors for global hegemony. In any case, on an economic level at least. To achieve this, the country seems to be applying a strategy which consists of limiting or even reducing its investments in the United States. Saudi Arabia, which has just joined the BRICS, also seems to be doing the same, further confirming plans to exit the dollar.
In short
- China and Saudi Arabia are reducing their investments in US Treasuries by $103.4 billion and $11.1 billion respectively.
- This Sino-Saudi financial strategy aims to diversify investments and neutralize the hegemony of the American currency.
- According to expert Ziad Daoud, these movements could impact the Federal Reserve and increase American interest rates.
These BRICS members who are reducing their investments in the United States
Some may have felt that BRICS was a fool’s errand. In other words, this group would be a kind of giant with feet of clay. It is an idea. But the fact remains that certain members of the organization are gradually moving their pawns.
Certainly, doubts still persist about the inevitable exit of the dollar desired by the BRICS. But it is increasingly clear that there is no shortage of strategy to achieve this. Recent news surrounding two BRICS members, namely China and Saudi Arabia, points in this direction.
According to the latest information, these two states are making substantial adjustments to their investments in US Treasury bonds. These are in fact bonds issued by the United States, to mobilize financing for their operations and projects.
Financial experts are unanimous in saying that US Treasuries are safe investments. In any case, among the most credible in the world. A status that they derive from the solvency recognized by the American government.
That said, it is intriguing to see China and Saudi Arabia reducing their investments in US Treasuries. This, $103.4 billion and $11.1 billion respectively, in the space of one year!
This is all the more intriguing since investments in US Treasuries are useful to two BRICS stakeholders. A priori, these States have no interest in reducing them… Except to consider that this is an obvious way of further weakening the power of the dollar.
An investment policy that affects the United States?
Objectively, we can see in this Sino-Saudi financial strategy a clear desire to diversify investments. Failing to invest in US Treasury bonds, Saudi Arabia, for example, is turning to riskier asset classes.
This change in economic relations with the United States would not be without consequences. According to emerging markets expert Ziad Daoud, this policy could have repercussions on the position of the Federal Reserve. A perspective which goes in the direction of the BRICS which want at all costs to neutralize American monetary hegemony.
The economist explains that if this strategy can lead to higher risks at the national level. This, by impacting global financial markets and increasing American interest rates.
We know that this increase in interest rates is rarely a good thing for the crypto market. In such circumstances, we are potentially witnessing a massive outflow of capital into cryptos. This can be felt on the prices of these assets.
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