The Mind-Boggling Speed of De-Dollarization

Today’s Market Update

There has been no respite — the market is on its fifth day down and people are feeling tense. Tariff worries and visa issues are weighing on sentiment. There are no positive statements coming from anywhere and the US–India treaty is still pending.

Today turned into a sixth day down for Nifty and we have now slid almost 500 plus points from recent highs. The market looks short-term oversold.

• Nifty lost about 0.66% for the day.

• Nifty Junior had a third sharp down day at around 0.75% down. Mid caps were down 0.66% and small caps were also down 0.66%.

• Bank Nifty slipped about 0.26%.

• Gold is holding up reasonably well, showing around 11,354 on the chart per gram, so it has not fallen much despite a good run in the last month.

Other Market Triggers

• A few defense stocks moved up, but mostly it was broad selling across banking, finance, power and autos.

• Tata Motors got hit badly. In the Nifty Next 50 some names showed recovery like Adani Power, and Vedanta is up on the commodity rally in copper and silver.

• But Lodha, Swiggy, Pidilite, Torrent Pharma, Zydus Life, United Spirits and others were down. It felt like across-the-board selling today.

• The mover of the day was Hindustan Copper, which rose about 6% again. That is the fifth straight day of gains for the stock as copper and silver prices go up.

• Tata Investment Corporation corrected today on profit booking after two strong days and was down roughly 5.5%. Tata Motors is also causing some market-cap loss because of Jaguar losses this financial year, which is weighing on sentiment.

What to watch next ?

• With little optimism left, this is exactly when a steady, systematic way of investing can matter. When markets turn around there will be stocks to pick, so there is no point trying to predict the market.

• Whether we find support (in Nifty) here or not is anybody’s guess, but 24,300 to 24,400 — which was the earlier support — is the logical place to watch. We may also find some support around the 24,800 mark. It is a big letdown for the bulls.

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What To Read This Week ?

China’s Rising Yuan: How De-Dollarization Is Reshaping Global Trade

Today, we delve into a fascinating shift in global finance, sparked by a recent observation on China's cross-border payments. The data, shared originally in a more personal format, highlights a remarkable trend that's already reshaping the world economy.

The Unstoppable Rise of the Yuan

The below data points to a rapid and significant change in how China conducts its international business.

Just 15 years ago, in 2010, only 1% of China's cross-border inbound payments were in yuan. The vast majority were settled in foreign currencies, primarily the U.S. dollar. Fast forward to today, and that number has skyrocketed to 50%. This isn't a gradual shift; it's a monumental acceleration in the yuan's role in global trade.

The Pace of De-Dollarization

This trend provides a powerful illustration of the ongoing de-dollarization process. While the U.S. dollar has long been the world's primary reserve and trading currency, this data from China shows a clear and rapid move away from that reliance. The sheer speed of this change is what's truly mind-boggling. It's a clear signal that the world is actively seeking alternatives to the dollar, and the yuan is emerging as a strong contender.

A Clear Indication of What's to Come

The trend isn't limited to inbound payments. A staggering 30% of China's trade in goods and services is now also being conducted in yuan. This is a solid, data-driven indication of a structural change in the global financial system. The dollar's dominance, once seen as unshakeable, is now visibly eroding. This isn't a future possibility; it's a present reality.

The Unseen Impact

While this shift may seem like a distant economic phenomenon, its implications are profound. A decline in dollar dominance could have significant consequences, potentially affecting everything from interest rates to geopolitical stability. Many of the systems and assumptions built around the dollar's role could face immense pressure. This is a moment in history where major changes are unfolding right before our eyes, even if we don't always recognize the full scope of their impact in real-time.

Key Takeaways:

• The Yuan's rise is not just an abstract concept; it's backed by concrete, verifiable data showing a massive increase in its use for international payments and trade.

• This trend is a powerful sign of de-dollarization and a potential rebalancing of global economic power.

• We are witnessing history in the making, and the decline of dollar dominance, if it continues at this pace, will have significant consequences that will be felt across the globe.

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