Crude indicators for dollar’s dominance

Ingvild Borgen is a rates and FX analyst and Kelly Chen is an economist at DNB Markets.

Ray Dalio has a rare gift when it comes to understanding both the minutiae and grand sweep of economic developments. But he has a blind spot when it comes to the Chinese renminbi.

The Bridgewater founder earlier this year argued that the Chinese renminbi is becoming increasingly international and is threatening the American dollar’s global supremacy. While the former might be true, the latter is a stretch. A big one.

The best illustration of the US dollar’s unique status is arguably the global market for oil trading. Most of the trade is denominated in US dollars, even when neither the barrels of crude nor the parties trading it have anything to do with the US.

It’s therefore understandable that China starting to pay for oil in renminbi is often seen as a big step towards a more ‘multipolar’…

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