Move over Dollar, is Japanese Yen the new safe haven currency? Here's what a strategist says

While geopolitics heat up and old alignments change, Quantum Strategy's David Roche has claimed that the Japanese yen is now the new safe-haven currency by replacing the US dollar, as per a report.

The US and its allies

Roche talked about the uncertainty concerning the US in global geopolitics during an interview with CNBC, and mentioned the consequences in global financial markets, reported Fortune.

He highlighted the way the United States has handled its foreign relationships under US President Donald Trump, has led its allies to doubt America's dependability. Roche asserted, "NATO is dead", noting that Trump is distancing the US from European allies and his more favourable approach towards Russia, as per Fortune.

The winners

This has paved the way for Russia's Vladimir Putin and China's Xi Jinping will be the winners challenging global US supremacy and the decline of democracy, as per the report.

The strategist claimed that, "The big loser is actually the US, because nobody will trust a US treaty again," as quoted by Fortune. He also added that "Global South countries will fall into China's orbit as a result," as quoted in the report.

New safe-haven currency

As per the report, one of the most profound effects of these changes is the possible decline of the US dollar as the world's reserve currency, according to Roche. Since Russia invaded Ukraine and the United States and its allies imposed sanctions on Russia, China and Russia have started a de-dollarization movement to cut down on their dependence on the dollar in international trade transactions and central bank reserves, reported Fortune.

Even Trump's tariffs on imports from other countries might lead other countries to retaliate by de-dollarizing the debt markets and currency markets, according to the report.

Roche said, "You want to keep out of the euro and own the yen, which is now the new safe haven as the US is getting to look very dangerous and US exceptionalism will suffer from the costs of Trump’s commercial tariffs,” as quoted by Fortune.

FAQs

Who benefits from the changing global dynamics?
According to Roche, Russia's Vladimir Putin and China's Xi Jinping are the winners.

Why does Roche say "NATO is dead"?
Roche opines that NATO is no longer a stable alliance because of the US's diminished participation, particularly under Trump's administration, reported Fortune.