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The US dollar is at the end of its strength

 The US dollar is the world's largest currency, and it is precisely because of this that the United States established a financial empire.

The cyclical alternation of the Federal Reserve's policies and the loosening and tightening of them have caused cyclical fluctuations in the US dollar, and the vast majority of countries' currencies are forced to fluctuate with the US dollar.

During this process, during certain periods, some countries were reaped by the US dollar empire.

The following chart shows the US dollar index. Around 2000, several years after the outbreak of the East Asian financial crisis, the US dollar remained at a historical high, and the entire East and Southeast Asia were harvested.

Although the currency in mainland China has not depreciated significantly, the economic damage has been quite severe. Not long after graduating from Lao Yang University, he faced a dual dilemma of improving state-owned enterprises and facing the East Asian financial crisis both domestically and internationally. In early 2001, when I came to Shanghai, there were actually more than ten abandoned buildings standing in the city center.

Fortunately, it was precisely under that difficult situation that the housing reform documents were issued in 1998, officially ushering in the commercialization and marketization of housing.

In 2001, when he came to Shanghai to work, Lao Yang happened to catch up with the initial recovery of the real estate market and entered the real estate industry, experiencing the golden 20 years of China's real estate market from beginning to end.

From 2004 to 2015, the US dollar index was in a weak stage, fluctuating around 80 points. And this stage is also the fastest developing stage of China's economy, finance, stock market, and real estate market.

From 2015 to 2021, the center of gravity of the US dollar index rose to around 95 points.

Since 2022, with violent interest rate hikes in the United States, the US dollar index has risen above 100 points and has recently hovered around 105.

As the United States enters a rate cut channel in the second half of the year, it is expected that the US dollar index will continue to decline.


In July 2005, China implemented the exchange rate reform. Starting to implement a managed floating exchange rate system based on market supply and demand, with reference to a basket of currencies for adjustment. That is to say, the temporary policy of pegging the RMB to the US dollar during the Asian financial crisis has ended, and the RMB exchange rate has returned to the managed floating arrangement established after the exchange rate integration in 1994.

The following chart shows the trend of the US dollar against the Chinese yuan, which is generally in sync with the US dollar index. For example, since 2022, the US dollar has been strong, while the Chinese yuan has been weak.

Since September 2022, the overall exchange rate between the US dollar and the Chinese yuan has remained above 7, which means that 1 US dollar is exchanged for over 7 Chinese yuan.

The exchange rate has an impact on both the stock and real estate markets.

Relatively speaking, due to the high restrictions on foreign investment in China's real estate, especially residential properties (implemented in 2007), there is not much foreign investment in the Chinese real estate market; But in the past few years, Chinese real estate companies issued more US dollar bonds, and exchange rate fluctuations had a significant impact on US dollar bonds.

There are more foreign and domestic investors in the stock market, so the fluctuation of the RMB has a significant impact on the stock market.


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