FXStreet reports that economists at Natixis said that a decline in the appeal of the dollar - dominant international reserve currency - could have several causes.
“The US is characterised by twin deficits: fiscal and external. Investors may therefore be concerned about a parallel trend of loss of fiscal solvency and loss of external solvency. This concern appeared already from 2002 to 2008 and caused a sharp decline in the dollar’s exchange rate.”
“In particular in the US, there has been a decline in productivity gains and in the participation rate. Moreover, a policy of reducing dominant positions in the US would have the effect of pushing down share prices and reducing the attractiveness of the US for equity investors.”
“Especially after the withdrawal from Afghanistan, and the US’ refusal now to intervene in other countries' organisation and political choices as long as they are not a threat to the US.”
“The development of more cooperative policies between eurozone countries may result in Europeans’ savings financing investments in the eurozone instead of being lent to the rest of the world, particularly to the US.”