RTTNews - Wednesday, the Pacific Investment Management Company or PIMCO said it clearly sees a loss of status for the U.S. dollar as a store of value even in the absence of a single viable alternative.

The global investment management firm said the main reason for the greenback to lose the reserve currency status is the injection of the massive amounts of U.S. dollar liquidity during the crisis.

Moreover, the greenback is likely to weaken against other currencies, especially the emerging market currencies, a Pimco portfolio manager Curtis Mewbourne said in a note on the firm's website.

Investors should consider whether it makes sense to take advantage of any periods of U.S. dollar strength to diversify their currency exposure, he said.

The massive amounts of U.S. dollar liquidity produced in response to the crisis have reduced demand for the U.S. dollar.

World's largest currency holder, China in June reiterated its call for a new global reserve currency to replace the U.S. dollar. The People's Bank of China had said there is a need to create an international reserve currency with a stable value in the long term to avoid the shortcomings of sovereign currencies for maintaining reserves. Russia also supported China's call.

But the fact is that we are witnessing real time indicators of significant changes in the global economy, with China clearly continuing its meteoric rise in terms of global economic importance, Mewbourne said.

According to him, it is not surprising that China's market capitalization is larger than Japan's, given that the Chinese economy will probably surpass Japan to become the second largest economy in the world next year, measured in current exchange rates.

China is clearly the largest emerging economy, but by no means is the phenomenon limited to China, PIMCO said. Indeed in terms of GDP, emerging market economies account for seven of the top twenty countries - China, Russia, Brazil, India, Mexico, South Korea and Turkey - and represent the component that is growing the fastest.

Supporting China's call, Brazil is also mooting a currency agreement that will allow traders to settle their deals in their own local currency, replacing the dollar.

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