The dollar may fall 20% — Financial Times




The fall in the dollar may become the largest since the beginning of 2001, analysts predict.





As a result of the emergence of an effective vaccine against the coronavirus COVID-19 and the subsequent recovery of the global economy, the US dollar may fall by 20%. It is reported by the Financial Times.

It is indicated that banks, which already had negative forecasts for the dollar next year, worsened their expected performance against the backdrop of the emergence of new clinical trials of vaccines. Wall Street analysts expect that the dollar will “fall” with the advent of the vaccine as confidence in the global economy rises.

“We believe the vaccine will trigger a bear market, allowing the dollar to follow a path similar to the one it took from the early to mid-2000s. Could the dollar fall by 20 percent next year? We think so,” he said. Citi Bank Analyst Calvin Jie.

Goldman Sachs spokesman Zach Pandle believes that the dollar will weaken even if the US economy starts to gain momentum.

“Even if the US economy performs well enough, we think the dollar could weaken substantially as investors seek higher returns outside the US and emerge from the safe havens they have been in throughout the COVID period,” he added.





Morgan Stanley cross-asset expert Andrew Sheets predicts a 4% drop in the dollar index and expects the currencies of Norway, Sweden, New Zealand, and Australia to rise as the vaccine becomes widely available.

“We are in ideal conditions for risky assets to rise, the dollar weakening, and stronger upside-sensitive currencies until the end of the year,” agrees George Saravelos, head of currency research at Deutsche Bank.

If the dollar falls by 20%, then this fall will be the largest since the beginning of 2001. But then the 33% drop took several years, continuing until the 2008 financial crisis. Demand for other currencies in emerging markets grew rapidly as investors followed low-interest rates. The trend was stopped by the global crisis.

Earlier it was reported that the dollar lost its place as the main currency in the international interbank payment system SWIFT. The decline in the share of dollar payments is associated with the depreciation of the US currency, which has lost 11% of its value since March 2020.

Also, this week it became known that the yuan rose against the dollar to a maximum since 2018. This was due to investor optimism about the prospects for the Chinese economy, which is rapidly recovering from the COVID-19 epidemic.





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TAGS: ECONOMY, USA

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