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The recent rise of DeepSeek AI has prompted some analysts to suggest this could aid in strengthening the Chinese yuan and dethrone the US dollar’s global dominance. This comes as the Chinese AI has been eating into America’s AI edge and the tech industry as a whole. According to the South China Morning Post (SCMP), the US stock market, which is tech-heavy, has been one of the strong pillars that have supported the US dollar’s global standing. DeepSeek could be the answer to China’s yuan after driving the AI industry In January, DeepSeek drove the AI industry into delight and turmoil after it launched its AI-powered chatbot at the fraction of the price of others, and challenged US-made generative AI models like OpenAI’s ChatGPT and Google’s Gemini. Now, discussions around DeepSeek’s rapid rise have taken on a new twist. Some market watchers opine the world might also see the rise of the Chinese yuan as a global currency ahead of the US dollar. A London-based asset management firm Ninety One wrote that DeepSeek’s rise could erode one of the key pillars that anchor the US currency’s global dominance, that is the tech-heavy US stock market. “If DeepSeek’s efficiency gains are verified, it is likely to lead to lower investment requirements and a flattening of technology barriers at a global level,” wrote Ninety One’s multi-asset portfolio manager Alex Holroyd-Jones in a recent article titled “How DeepSeek Might dethrone the dollar.” “Both will implicitly benefit energy-poor regions and relative tech laggards, thereby undermining one pillar of US exceptionalism.” Holroyd-Jones. In his piece, Holroyd-Jones identified three pillars that have always supported the US dollar’s global dominance. These are expansionary government policy, higher interest rates, and technological leadership, where the US has been at the forefront of technological innovations, particularly AI. US’ tech leadership…

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Filed under: News - @ February 16, 2025 4:09 pm