Investing.com -- South Korea, Singapore, and China’s currencies could see a boost as central banks worldwide look to diversify their reserves away from the dollar, according to Goldman Sachs Group Inc (NYSE:GS).
The investment banking giant noted that while the U.S. dollar and the euro continue to be primary reserve assets, central banks may increase their allocations to non-traditional currencies as the dollar’s dominance continues to wane.
Goldman Sachs strategists, including Danny Suwanapruti and Rina Jio, identified the South Korean won, Singapore dollar, and Chinese yuan as the top candidates in Asia to benefit from this shift. They anticipate increased demand for the won, with South Korea expected to join the FTSE World Government Bond Index next year.
Singapore, with its AAA rating, is likely already drawing central bank investments. China’s extensive trade connections with the rest of the world make the yuan a natural choice for potential reserve re-allocations.
The Goldman Sachs strategists believe that the trend of diversifying away from the dollar is likely to continue, noting that this trend has been firmly established over the past decade.
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