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BofA analysts have indicated a growing trend in the global financial environment, pointing to an increased focus on the role of the U.S. dollar (USD).
According to their observations, recent events have surpassed the data traditionally sourced from the International Monetary Fund's Currency Composition of Official Foreign Exchange Reserves (IMF COFER), which has not been able to capture the current shift in sentiment.
While there has been some evidence of a move away from the USD in recent years, it has occurred amidst a period marked by U.S. exceptionalism and robust gains for the USD. However, the perception of the USD as an invincible reserve currency is now being questioned.
The BofA team has noted that the signs of an accelerated move away from the USD, often referred to as de-dollarisation, underpin their structurally bearish outlook on the currency.
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