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The US dollar could fall 20% next year. Analysts believe that the sharp drop will be caused by the appearance of the COVID-19 vaccine and the subsequent recovery of the global economy.
Write about this Financial Times.
The publication writes that Wall Street analysts admit that the dollar will fall in 2021 after the vaccine appears, as confidence will return to the global economy. They note that the dollar is in demand during times of stress, reflecting its traditional value to investors and savers.
“We believe that the vaccine will trigger a bear market, allowing the dollar to follow a path similar to the one it took in the early to mid-2000s. Could the dollar fall 20 percent next year? We believe it will.” said. Citi Bank strategist Calvin Jie.
At the same time, according to the Bloomberg consensus forecast, the dollar index will fall 3% by the end of 2021. According to the average forecast, the euro will rise to $ 1.21 during this period from $ 1.18 today.
The drop in the dollar exchange rate by 20% will be the largest since the beginning of 2001. But then the drop of 33% took several years, continuing until the financial crisis of 2008. At the same time, the drop in the dollar index this year is negligible compared to its previous growth: it grew by almost 13% in 2014 and 9% in 2015.
Goldman Sachs spokesman Zach Pandle believes the dollar will weaken even if the US economy begins to gain momentum.
“Even if the US economy performs well enough, we believe the dollar could weaken substantially as investors seek higher returns outside of the US and emerge from the safe havens they have been in during the COVID period,” he added .
Morgan Stanley’s cross-asset strategist Andrew Sheets forecasts a 4 percent drop in the dollar index and expects the currencies of Norway, Sweden, New Zealand and Australia to rise when the vaccine becomes widely available.
“We are in ideal conditions for risky assets to rise, the dollar to weaken and upward-sensitive currencies to be stronger through the end of the year,” agrees George Saravelos, head of currency research at Deutsche Bank.
We will recall, it was previously reported that Ukraine faces the worst recession in a decade due to a pandemic.
It was also reported that the European Commission worsened the forecast for the global economic recession.
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