Rogers admits that he still owns a lot of US dollars but not because it’s a sound currency.
“So, you would say why do you own it [US currency – Ed.] then? I own it because more turmoil is coming, people look for a safe haven in turmoil so they will go to the dollar. It’s not safe but they think it is.”
The investor explained that the US currency is going to get higher but many countries like China, Iran, Russia and others are now trying to get rid of it.
“In the next few years the American dollar is going to lose its position as the world’s reserve currency and the world’s medium of exchange,” Rogers said, adding that the world has always moved away from dominant currencies in the past as situations changed.
He said that the British pound once used to be the dominant currency in the world, and before that there were other dominant currencies like the Spanish peseta, the French franc, and the Dutch guilder.
“They all had that position at one time or another but then went to excess and are not that sound anymore, they lost their position… People don’t like Washington’s power, so they are moving away and finding ways to get away from the dollar. It has happened throughout history, it happened to the pound sterling, you know the rest of that story,” Rogers said, adding there’s no need to worry because “it’s not a disaster.”
He cited Russia and Turkey as examples of countries that are now starting to trade with each other directly in their own currencies. “Everybody is now trying to get rid of the US dollar,” he said.
Talking about the possible alternative currency which could replace the greenback, Rogers said: “The only one I see on the horizon is China’s renminbi [yuan – Ed.], but not any time soon. The renminbi is not even convertible yet so it is impossible for a while.”
The investor added that we could have regional currencies for a while but there’s no sense in having two or three dominant currencies.