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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/FederalReserve-820x547.jpg" alt="" class="wp-image-416006" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/FederalReserve-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/FederalReserve-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/FederalReserve-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/FederalReserve-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/FederalReserve-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/FederalReserve-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A security guard walks in front of an image of the Federal Reserve following the two-day Federal Open Market Committee (FOMC) policy meeting in Washington, March 16, 2016. REUTERS/Kevin Lamarque</figcaption></figure>



Despite a year’s worth of interest rate increases, inflation rose again in March, according to economic data released Friday that the Federal Reserve watches closely.



The personal consumption expenditures price index excluding food and energy increased 0.3% for the month, in line with the Dow Jones estimate. On an annual basis, so-called core PCE increased 4.6%, slightly higher than the expectation for 4.5% and down 0.1 percentage point from February.



Including the volatile food and energy components, headline PCE also rose just 0.1% for the month, equating to a 4.2% annual increase, down sharply from 5.1% in February. That measure peaked out around 7% in June 2022, the highest level since December 1981.



The headline number was softer as energy prices slid 3.7% for the month while food costs declined 0.2%. Goods prices fell 0.2% while services increased 0.2%.



In another key inflation measure for the Fed, the employment cost index increased 1.2% for the first quarter, higher than the 1% estimate.



The inflationary pressures were reflected in the willingness of consumers to keep spending. Personal income rose 0.3% for the month but consumer spending was flat, as expected.



While the annual rates are below the peaks hit in 2022, they are still well above the central bank’s 2% target and further evidence that price increases are proving stickier than policymakers had anticipated.



Since March 2022, the Fed has raised its benchmark interest rate nine times for a total of 4.75 percentage points. Markets widely expect the rate-setting Federal Open Market Committee to approve another quarter percentage point increase at next week’s meeting, before it pivots to see the impact the policy tightening is having on the $26.5 trillion U.S. economy.

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Calls to move away from relying on the U.S. dollar for trade are growing.



More and more countries — from Brazil to Southeast Asian nations — are calling for trade to be carried out in other currencies besides the U.S. dollar.



The U.S. dollar has been king in global trade for decades — not just because the U.S. is the world’s largest economy, but also because oil, a key commodity needed by all economies big and small, is priced in the greenback. Most commodities are also priced and traded in U.S. dollars.



But since the Federal Reserve embarked on a journey of aggressive rate hikes to fight domestic inflation, many central banks around the world have raised interest rates to stem capital outflows and a sharp depreciation of their own currencies.



“By diversifying their holdings reserves into a more multi-currency sort of portfolio, perhaps they can reduce that pressure on their external sectors,” said Cedric Chehab from Fitch Solutions.



To be clear, the U.S. dollar remains dominant in global forex reserves even though its share in central banks’ foreign exchange reserves has dropped from more than 70% in 1999, IMF data shows.



The U.S. dollar accounted for 58.36% of global foreign exchange reserves in the fourth quarter last year, according to data from the IMF’s Currency Composition of Foreign Exchange Reserves (COFER). Comparatively, the euro is a distant second, accounting for about 20.5% of global forex reserves while the Chinese yuan accounted for just 2.7% in the same period.



China is one of the most active players in this push given its dominant position in global trade right now, and as the world’s second largest economy.



Based on CNBC’s calculation of IMF’s data on 2022 direction of trade, mainland China was the largest trading partner to 61 countries when combining both imports and exports. In comparison, the U.S. was the largest trading partner to 30 countries.



“As China’s economic might continues to rise, that means that it’ll exert more influence in global financial institutions and trade etc,” Chehab told CNBC last week.



China — long among the top 2 foreign holders of U.S. Treasurys — has been steadily reducing its holdings of U.S. Treasury securities.



Mainland China held nearly $849 billion of U.S. Treasurys as of February this year, the latest data from the U.S. Treasury department showed. That’s at a 12-year low, according to historic data.



<h2 class="wp-block-heading" id="h-changing-dynamics"><a></a>Changing dynamics</h2>



But China isn’t the only country calling for a shift away from the U.S. dollar.



Brazilian President Lula made a state visit to Beijing in April where he reportedly called for reduced reliance on the U.S. dollar for global trade.



Trade between Brazil and China reached $150 billion in 2022, a 10% jump from a year ago, according to S&amp;P Global Market Intelligence.



During a recent visit to China, Malaysia’s Prime Minister Anwar Ibrahim was said to have suggested setting up an “Asian Monetary Fund” to reduce reliance on the U.S. dollar. In an April 6 interview with CNBC, Malaysia’s trade minister also acknowledged Malaysia’s concerns about Asia’s dependency on the U.S. dollar.



At the ASEAN finance ministers and central banks meeting in Indonesia in March, policymakers also discussed the idea of cutting their reliance on the U.S. dollar, the Japanese yen and the euro and “move to settlements in local currencies” instead.



In early April, Indian media widely reported that the<a href="https://timesofindia.indiatimes.com/topic/indian-rupee" target="_blank" rel="noreferrer noopener"> </a>Ministry of External Affairs (MEA) had announced that India and Malaysia were starting to settle their trade in the Indian rupee.



<h2 class="wp-block-heading"><a></a>Economic benefits</h2>



Analysts say changing global economic dynamics are driving the co-called de-dollarization trend which can benefit local economies in a number of ways.



Trading in local currencies “allow exporters and importers to balance risks, have more options to invest, to have more certainty about the revenues and sales,” former Brazilian ambassador to China, Marcos Caramuru, told CNBC last week.



Another benefit for countries moving away from using the dollar as the middle man in bilateral trade, is to “help them move up the value chain,” said Mark Tinker from ToscaFund Hong Kong told CNBC “Street Signs Asia” early April.



“It isn’t about selling cheap stuff to Walmart, keeping down the prices for American consumers in order to earn dollars to buy its energy. This is now about actually a completely bilateral trade bloc,” Tinker said.



Meanwhile, growth of non-U.S. economic blocs also encourage these economies to push for wider use of their currencies. The IMF estimates that Asia could contribute more than 70% to global growth this year.



“U.S. growth might slow, but U.S. growth isn’t what it’s all about anymore. There is a whole non-U.S. block that’s growing,” said Tinker.&nbsp;“I think there is going to be a re-internationalization of flows.”



<h2 class="wp-block-heading"><a></a>Geopolitical concerns</h2>



Geopolitical risks have also accelerated the trend to move away from U.S. dollar.



“Political risk is really helping introduce a lot of uncertainty and variability around how much of a safe haven that U.S. dollar really is,” said Galvin Chia from NatWest Markets told “Street Signs Asia” earlier.



Tinker said what accelerated the calls for de-dollarization was the U.S. decision to freeze Russia’s foreign currency reserves after Moscow invaded Ukraine in February 2022.



The yuan has reportedly replaced the U.S. dollar as the most traded currency in Russia, according to Bloomberg.



So far, the U.S. and its western allies have frozen more than $300 billion of Russia’s foreign currency reserves and slapped multiple rounds of sanctions on Moscow and the country’s oligarchs. This forced Russia to switch trade to other currencies and increase gold in its reserves.



“Now you find that if you disagree with U.S. foreign policy, you risk having those confiscated or frozen. You’ve got to have alternative place to put those assets,” Tinker said. In the Middle East, major oil exporter Saudi Arabia has reportedly signaled it’s open to trade in other currencies other than the greenback. 



Although analysts don’t anticipate a complete break away from dollar-denominated oil trade over the short-term, “I think what they’re saying more is, well, there’s another player in town, and we want to look at how we trade with them on a bilateral basis using yuan,” said Chehab. &nbsp;&nbsp;



<h2 class="wp-block-heading"><a></a>Dollar is still king</h2>



Despite the slow erosion of its hegemony, analysts say the U.S. dollar is not expected be dethroned in the near future — simply because there aren’t any alternatives right now.



“Euro is somewhat an imperfect fiscal and monetary union, the Japanese yen, which is another reserve currency, has all sorts of structural challenges in terms of the high debt loads,” Chehab told CNBC.



The Chinese yuan also falls short, Chehab said.



“If you look at the yuan reserves as a share of total reserves, it’s only about 2.5% of total reserves, and China still has current account restrictions,” Chehab said. “That means that it’s going to take a long time for any other currency, any single currency to really usurp the dollar from that perspective.”



Data from IMF shows that as of the fourth quarter of 2022, more than 58% of global reserves are held in U.S. dollar — that’s more than double the share of the euro, the second most-held currency in the world.



The international reserve system “is still a U.S.-reserve dominated system,” said NatWest’s Chia.



“So long as that commands the majority, so long as you don’t have another currency system or economy that’s willing to step up to that international reach, convertibility and free floating and the responsibility of a reserve currency, it’s hard to say dollar will be displaced over the next 3 to 5 years. unless someone steps up.”



—&nbsp;CNBC’s Joanna Tan and Monica Pitrelli contributed to this report.

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Twitter removed blue legacy check marks from nonpaying users’ accounts on Thursday, weeks after the Elon Musk-owned company initially announced that the changes would begin.



The company confirmed on Wednesday that it would begin removing the blue check marks from users who didn’t pay for the company’s subscription service, Twitter Blue. By midday Thursday, check marks had begun to disappear from nonpaying accounts.



Before Musk took Twitter private, the check marks were limited to notable figures in government, media, or who were otherwise in the public eye and ran a heightened risk of impersonation. Musk said Twitter Blue would offer the option for paid verification shortly after he completed his $44 billion takeover of the social media site.



The changeover means that only paying subscribers who have “verified” their phone number will be entitled to Twitter verification and the blue check mark. Government accounts and some corporate accounts will still maintain verification through a separate set of icons, in silver and gold, respectively.



An ensuing uproar over the initial price — $20 — and a poorly executed rollout, including rampant impersonation of public figures and corporations, forced Musk to delay the removal of legacy verification. Twitter later rolled out color-coded verification symbols for verified brands or government-associated organizations



At the time of publication, there were significant gaps in institutional verification, leaving them open to the possibility of impersonation. The Twitter accounts of numerous U.S. attorney offices remained unverified, as did various arms of the U.S. Department of Justice and field offices of the FBI.



Twitter CEO Musk, who also runs Tesla and SpaceX, has wielded his power over the platform to alter the verification and labeling of media outlets, including NPR and The New York Times. NPR elected to stop using the platform in an official capacity after it was falsely labeled as being state affiliated; the Times lost its verified status on its primary account after the outlet said it wouldn’t pay for verification on Twitter.

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U.S. Treasury yields fell on Thursday as investors awaited economic data and comments from Federal Reserve officials that could provide hints about the central bank’s monetary policy plans.



At 3:56 a.m. ET, the yield on the 10-year Treasury was down by almost four basis points to 3.5623%. The 2-year Treasury was last trading at around 4.2166% after falling by close to five basis points.



Yields and prices move in opposite directions and one basis point is equivalent to 0.01%.



Investors assessed what could be next for Fed policy, especially regarding interest rates. Many are expecting the central bank to announce another 25 basis point interest rate hike after its next meeting on May 2-3. &nbsp;&nbsp;



The Fed indicated at its last meeting in March that a pause of rate hikes could be on the horizon, depending on economic data.



Both the latest consumer and producer price index reports in the U.S. have since indicated that inflation could be easing. Globally, however, the picture has been less clear, with the U.K.’s latest inflation reading, published Wednesday, remaining unexpectedly high.



That fueled investor concerns about further interest rate hikes, and rates staying elevated for longer — a prospect which Fed officials, including Atlanta Fed President Raphael Bostic, have also hinted at.



On Thursday, investors will be scanning remarks from Fed Governor Christopher Waller, Atlanta Fed President Raphael Bostic and Cleveland Fed President Loretta Mester for fresh policy hints.



Existing home sales and initial weekly jobless claims figures are also due Thursday. &nbsp;

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CNBC

Why Porsche Is Investing $100 Million On Synthetic Fuel

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