De-dollarization fears are overblown, but rising debt and US brinkmanship are top threats to the greenback, Bank of America says
The greenback's reign won't be nearing its end anytime soon as de-dollarization headlines are exaggerations, Bank of America said in a Thursday note.
"Because much of the USD's dominant role comes from standing in front of the TSY market, surprise defaults from a debt ceiling showdown would compromise the dollar's attractiveness as a store of value," BofA wrote."Therefore, the key threats to the USD's dominant role seem largely domestic, as opposed to competition from other currencies."
The note pointed out that US government debt is the highest in G10 as a share of GDP, except of Japan, and the IMF expects the debt-to-GDP ratio to climb to 136% by 2028 from 122% in 2022.
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