Russian people line up against the dollar
In June, the U.S. Treasury Department announced more than 300 new sanctions against Russia. Subsequently, Russia's major stock exchanges suspended the trading of the US dollar and the euro on the 13th, triggering a frenzy of people to buy US dollars. The United Kingdom joined yesterday's US sanctions on the Russian stock exchange.
According to Newsweek, videos of Russian people rushing to buy dollars have gone viral on social media platforms. The video shows Russians lining up to snap up dollars after the Moscow Exchange suspended trading in the dollar and the euro due to new US sanctions.
Before 6.11, it costs 89.1 rubles for 1 dollar.
After the sanctions, it even costs 200 rubles for 1 dollar, which depreciates by 50% overnight.
Asian currencies have depreciated widely
On April 29, in the international foreign exchange market, the yen fell rapidly against the US dollar, once falling below 160 yen to 1 US dollar, the first time since 1990, hitting a 34-year low.
The Philippine peso fell below the key level of 57 pesos for the first time since late 2022, exacerbating pressure on the country's central bank to intervene in the money market. The rupiah was one of the sharpest Asian currencies, prompting Bank Indonesia to intervene to stabilize the rupiah exchange rate.
Benefits of holding US dollars
In the global economy, the US dollar occupies an irreplaceable position. As the world's main reserve currency and the core of international transactions, the stability and liquidity of the US dollar provides great convenience and security for global investors.
1. A safe haven for funds
As a safe-haven asset, the U.S. dollar can help individuals hedge their risk in their portfolios. In the event of an economic downturn or market volatility, the US dollar tends to appreciate in value, allowing it to offset losses in other assets. Individuals can hedge their risk in their portfolios by holding U.S. dollar cash, U.S. dollar-denominated bonds, or foreign exchange derivatives.
The U.S. dollar smile curve reflects the strengthening of the U.S. dollar during a recession or recovery. In the current international economic environment, the US dollar will be used as a safe asset to meet the hedging needs of global investors, which is one of the underlying logics of our allocation of US dollar assets.
2. Global reserve currency and high liquidity
The U.S. dollar is one of the most liquid currencies in the world and is widely used in international trade and financial transactions. This liquidity allows investors to easily exchange dollars or invest them in overseas markets. The high liquidity of the U.S. dollar also provides individuals with the convenience of remittances and cross-border investments.
According to the Bank for International Settlements, the U.S. dollar participates in about 90% of global foreign exchange transactions.
The US dollar is still in an absolute position in the international financial system and is also the main reserve currency of a large number of countries around the world. This status of the dollar is not accidental, but is the result of a combination of factors.
3. Avoid single currency risk
Asset allocation through the US dollar can effectively avoid the economic risks brought about by relying on a single currency. This diversification strategy helps stabilize the overall performance of the asset, especially when the local currency is under depreciation pressure.
At present, the international situation is complex and the currency exchange rate is unstable, and multi-currency asset allocation can effectively resist the potential risk of asset depreciation.
4. Diversify your investment
Holding U.S. dollars can help individuals diversify their investments. The U.S. dollar has a low correlation with other currencies, which means that the U.S. dollar can help stabilize a portfolio when other currencies depreciate. Individuals can diversify their investments by investing in U.S. dollar-denominated assets or by converting their local currency into U.S. dollars.
5. Participation in the global capital market
Holding U.S. dollars gives investors easy access to the U.S. market, the world's largest capital market, to find high-value targets to invest in.
Different from the RMB, the US dollar can participate in global capital activities more flexibly, and the scope and channels of investment are broader.
In global economic activities, the US dollar has always been in a strong dominant position, and most of the different economies rely on the US dollar for transaction settlement in international trade activities. Therefore, US dollar assets facilitate the appreciation of our assets in different investment activities.
6. Low inflation rate and stability
The Fed has set a long-term inflation target of 2%, which provides predictability and stability for the pricing and long-term investment of dollar assets. The low inflation rate of the US dollar has helped maintain purchasing power and investment value compared to other currencies.
Judging from past statistics, in 2019, the inflation rate of the RMB is much higher than that of the US dollar. This is because the special status of the US dollar can transfer inflation to the outside world, so it has good stability.
From a longer time perspective, the allocation of US dollar assets can be a good hedge against inflation and avoid the appreciation rate not catching up with the inflation rate, which is a practical and necessary consideration in asset management.
A better way to choose USD assets is Hong Kong insurance
1. Hong Kong's insurance income is stable and high
Hong Kong's US Dollar Savings Participating Insurance products have an expected return IRR of up to 7%+, and the policy value is composed of both guaranteed and non-guaranteed parts. Although there is uncertainty about dividends, according to regulatory regulations, insurance companies need to disclose the fulfillment ratio of dividends on their official websites, and the fulfillment ratio of most companies is currently between 95% and 105%, which means that non-guaranteed dividends are more likely to be realized, and can eventually obtain stable and considerable returns.
2. Hong Kong insurance has many functions
Multiple policy currencies to reduce inflation risk
At present, the ace savings insurance policies of major insurance companies in Hong Kong cover as many as 9 international mainstream currencies. The policy currency can be freely converted according to personal needs to meet various needs such as overseas pension, immigration, and study abroad.
Reasonable allocation of US dollars and other foreign exchange assets can effectively hedge the risk of a single currency, better realize the preservation and appreciation of property, and reduce the risk caused by inflation.
The dividend income is high and the value is steadily increased
Hong Kong insurance has an expected IRR of up to 7%+, which can achieve steady growth on the basis of capital protection.
What is the difference between the income of mainland insurance and Hong Kong insurance by depositing 1 million RMB:
Compared with the same type of products with compound interest of less than 3% in the mainland, the return of 7%+ in Hong Kong insurance still has obvious advantages.
Policy splitting feature
After the policy has been in force for a specified number of years, the policyholder can choose to split the policy into N parts.
Whether you want to protect one more loved one, or want to convert part of your wealth into another policy currency, or want to split the policy into two parts to achieve special funds, you can't do without "policy splitting".
Asset isolation and privacy protection functions
(1) Use different jurisdictions to achieve a certain preservation effect.
(2) The confidentiality of information is good, and the possibility of information disclosure is greatly reduced.
(3) Effectively isolate insurance assets legally and facilitate the flexible use of funds.
Unlimited changes to the insured/nominated contingent insured
This feature can reduce the risk of interruption of wealth accumulation due to the death of the original insured, and can also allow the wealth to continue to grow in the hands of the insured, so as to better achieve wealth inheritance.
Anti-offspring profligacy function
In addition to the lump sum payment, the beneficiary can also customize the payment method of the death benefit during the life insured's lifetime, such as monthly/quarterly/annual instalments, or a combination of the two methods, so that the beneficiary can receive the death benefit and accidental death benefit in different ways, providing a high degree of flexibility for personal estate planning and the future of loved ones.
3. Hong Kong insurance - easy to get started with overseas investment
It is said that Hong Kong insurance is the first stop for overseas assets, with convenient transportation and barrier-free communication. In 2023 alone, the premiums of mainland insurance in Hong Kong will reach HK$59 billion, and most of the insurance policies will be in US dollars. It has become a trend for mainlanders to go to overseas markets such as Hong Kong to buy insurance.
When choosing a specific product, you also need to choose a policy plan that suits you according to your actual situation and needs, do not blindly follow the trend, comprehensively consider the details of the product, and choose a policy plan that suits you. Professional planning, keep the wealth, and share the fruits of wealth with your family!
If you have any questions about product selection, Hong Kong insurance application, account opening and payment, or insurance claims, you are welcome to add green bubbles HDO1045 for consultation.
We have a professional team to communicate with you in detail, and can tailor an insurance plan for you, assist you in completing the insurance payment process, and help you better manage your policy.
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