U.S. politicians may have side-stepped a debt default at the 11th eleventh hour on Wednesday, but currency analysts have told CNBC that the dollar’s status as a reserve currency will suffer long-term damage from the impasse.
“I think it’s part of the demise of the dollar as an international reserve currency,” Chris Watling, CEO of Longview Economics, said of the U.S. government’s political impasse. Alasdair MacLeod, head of research at GoldMoney Foundation, agreed saying the dollar’s credibility has taken a “very, very bad hit”.
Ratings agency Fitch was equally bearish on Tuesday, indicating that the prolonged negotiations over raising the debt ceiling “risked undermining confidence in the role of the U.S. dollar as the preeminent global reserve currency” as it put the U.S. government’s AAA credit rating on “rating watch negative”.
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