1. There will be substantial reduce of USD translated in FOREX, i.e. In the news above, Exporter and Importer from China & Brazil who used to use USD to finance the bilateral trade will shift the currency to Yuan and Real(Brazil Currency).
2.Big Boys (Hedge Fund, Banks who trade FX) may shift their attention to alternative currency such as Euro, Yen etc. The phenomena can be justified by USD Index which had declined recently.
3.The liquidity comparatively will be reduced. Since FX Market transaction is more then trillion dollars a day, so this will not affect the retail investors like you.
Are the Americans and other contries going to wait and let the USD depreciate in long term?
From the economy aspect, American knows BRIC already fed up buying their debt( paper printed in the thin air), they must do something. Of course different economists have different point of views.
My point of views (I am just a person who follow the logic and the market acceptance).
1. Even the US has the biggest debt in the world and technically bankrupt, one cannot ignore their buying power and population (300++ millions), many countries including China, India, Malaysia etc.... still view the US is the biggest importer. In other words, USD will be used widely if it involves transaction with the US.
2.All the biggest USD debt holders will not let USD depreciate. (It will reduce their asset's value)
3.Americans saving have been increased recently.(USD will be bought home and kept in their banks)
4.White House cannot simply print money as they may find difficulties to find USD takers.
5.If American's "real productivity" is coming back, then USD will be getting stronger again. (Note that Big American MNC is shifting back their resources such as factory back to America).
Above are some of my views.
In long term, USD will not face extinction but will not act as "Big" as in the market. We know China is not keen to float Yuan at this moment, things will change drastically if they are willing to do so. As Chinese is more rational than "Ang Mo", they will do things quietly so their asset will be protected.
