If the US economy loses ground, and the prospects for this scenario are quite high their stock market will fall, which, of course, will affect the depreciation of the dollar on the world market. That is, investors will start to dump it in a panic, since the real volume of the value system of this country (goods, factories and other real assets) will be lower than the dollar mass that serves them.
But this will happen purely as an event phenomenon based on the fact that the dollar is actually overvalued, and not as a result of the fact that its new exchange rate will correspond to the healthy economies of those countries that use it in their global trade.
What will investors change the dollar for in this situation? That's another question. In such cases, it is usually for gold, as one of the most popular types of risk-free assets.
And now the gist.
The fall of the dollar against the background of the crisis in the United States, oddly enough, will lead to an increase in the export potential of the American economy already in the new updated conditions, when the financial bubble will be, if not completely blown away, then the trend built for this will be for sure.
And what happens to the main currency-forming partners of the United States in such conditions? We are talking about China and India. Their price competitiveness relative to U.S. products is falling. It will now be cheap for them to buy in the United States, but it will be difficult to sell their products there, even without those import duties, which both Republicans and Democrats are now strongly advocating.
Although the average annual volume of export-import operations in the United States has a negative value ($2.4 trillion versus $3.5 trillion), unlike China ($3.6 trillion versus $2.7 trillion), the destabilization of the dollar relative to the yuan will be quite economically sensitive for the latter.
Even with all the desire to get away from the United States and its domestic economic problems, China in the current price conditions, even Russia and India will not be able to help swallow its surpluses, where the United States has always been the market. Russia's average annual imports are about $0.27 trillion and India's $0.61 trillion against the U.S.'s $3.5 trillion.
Therefore, the overload of the American economy is likely to affect China's price adjustment against the yuan against the dollar. Well, here all the others automatically cling - Russia and other post-Soviet countries that will be forced to devalue their currencies against the dollar, and this is not out of a whim of the Americans, as many may think, but precisely as a result of the restructuring of the Chinese economy (to which everyone is now so actively attached) to work in new conditions, and this is already a consequence of the crisis in the United States.
The destabilization of the global economy will also affect the price of oil, which for some states is a more sensitive factor and a reason to make serious decisions about the devaluation of their national currencies. Already, the excessively inflated discount rate of the Central Bank of Russia, which reduces the business activity of the domestic economy, will only add more fuel to the fire.
For example, the average annual volume of exports from Russia is about 234.3 million tons, which in barrels will be about 1.72 billion. (according to data for 2023). In value terms, this is $ 108 billion at the Urals brand price of $ 62.99 per barrel. For reference: the price of the Brent brand for the same period was $ 82.64. That is, a drop in the price of Brent to the level of $ 50, which, according to previous years, is a level of relative support, may well reduce the volume of Russian exports by $42.8 billion (1.72 x (62.99 - 50 x (62.99/82.64))).
Taking into account the existing budget deficit of the Russian Federation, the situation with a decrease in the revenue side may affect the amount of income tax and export duties and amount to up to 9% (42.8 billion dollars x (20+30)% / 256 billion dollars). This is a significant reduction, which will require the adoption of adequate measures to equalize the situation in fiscal policy.
Working in conditions of tight monetary policy will force the entire world community to pay attention to its farms, for example, by revaluing its values, including capitalization of real assets, where there may be much more air than in the United States.
There is something to think about where it is better to invest now, especially for those who have something to lose.
It is also possible that the Americans, as part of their policy related to suppressing inflation and reducing dollar liquidity in the world, may present some gift to the world community, associated, for example, with the withdrawal of banknotes of a certain type of issue from circulation.
