Russia’s Dollar Selloff Puts Spotlight on Growing Concern Over Inflation in US, Investor Says

© Flickr / Marco Verch / US Dollar Banknoten auf weißem Hintergrund US dollar banknotes on white background
 US dollar banknotes on white background - Sputnik International, 1920, 04.06.2021
WASHINGTON (Sputnik) - Russia’s decision to cut the US dollar from its National Wealth Fund reveals the increasing concerns about inflation in the United States, Director of investment consulting firm Navigator Principal Investors, Kyle Shostak, told Sputnik.

“Russian dollar selloff also put a spotlight on the suddenly growing concern over inflation in the US,” Shostak said. “With so much stimulus money being pumped into the economy at a historical record level - almost $6trn since the beginning of the pandemics, many bankers are rightfully questioning the dollar's continuing dominance. Investors are worried that the money-printing machine will trigger inflation in the very near future.”

As a result, Shostak went on to say, many investors have drastically increased allocations in gold and other assets, including cryptocurrencies.

“While the dollar is now used in 88% of all currency trades and it still accounts for about 62% of global foreign exchange reserves, this is down from a peak of more than 85% in the 1970s,” he pointed out.

“While I don't believe that Bitcoin per se will be recognized by major central banks and sovereign funds as a true reserve asset, in private transactions it will be seen as a major alternative to gold and commodities.”

The building of the Ministry of Foreign Affairs of the Russian Federation in Moscow - Sputnik International, 1920, 05.04.2021
Reduced Use of Dollar in Transactions Is Reaction to Geopolitical Situation, Russian Deputy FM Says
“On a much more massive scale compared to Russia's, China's push to expunge the dollar from its financial system is gaining momentum,” Shostak added. “Since peaking in 2018, China has reduced its holdings of the US Treasuries in the course if 2019-2020 by $88bn. Diversifying away from the US dollar is perfectly in line with China's focus on trade relationship beyond just the United States.”

On Thursday, Russian Finance Minister Anton Siluanov said that the ministry will introduce changes to the structure of the National Wealth Fund within a month, mentioning that the share of the US currency will decrease to zero. The share of the British pound sterling will drop to 5 percent, the share of Japan's yen will remain unchanged at 5 percent, the share of euro will grow to 40 percent and the share of yuan will grow to 30 percent, according to the minister.



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