28 November 2020

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28 Nov  2019 1629

In 2020, the dollar will depreciate

Next year, investor interest in US assets will plummet. The dollar is no exception - it is waiting for the devaluation, warns Morgan Stanley investment bank. Disappointing and forecasts of Bank of America.

According to the forecast of the investment bank, the dollar's decline will be one of the main trends of the next year. "The US currency will suffer due to the economic slowdown in the country, recovery rates of growth outside the United States and reduce the inflow of portfolio investments", - analysts say Morgan Stanley.

Impact and change of policy by the Federal Reserve System. "Donald Trump is constantly requires the Fed to weaken the dollar and go to negative rates, which drastically reduces the profitability of dollar assets," - said a senior currency strategist at Morgan Stanley Hans Redeker.

A few days ago Trump once again put pressure on the Fed chief Jerome Powell, demanding that the regulator reduced the rate further. "The basic interest rate is too high compared to what we have in other countries -. Our opponents actually have rates should be lower than that of all other too strong dollar hurting manufacturers and growth.!" - I wrote the US president on Twitter.

This year there was a significant inflow of foreign investments in the US currency.

But the course at reduced rates, to which the regulator has passed in July, forcing investors to seek higher returns in other markets.

Another factor - Europe, Japan and China are less invested in the global financial markets, which reduces the demand for the dollar.

The American consulting firm Jeffries warns that in the near future is possible budget deficits surge - because of the presidential elections in 2020. There are fears that the already huge gap between revenues and expenditures greatly increased with the advent of a new president. This, according to analysts, is able to drive the dollar in the long period of weakening.

"In the end, the result is the same: the exorbitant costs of the government if the market starts to realize that the public finances close to the stress as a result of the next president's actions, the dollar will weaken in the short term." - specify in Jeffries.

Decline of the dollar against the yen, the euro and the pound in 2020, predict, and Bank of America, according to RIA Novosti.

Another major bank Goldman Sachs noted in the review of Global Macro Outlook, that the moderate growth of the US economy and weak economic activity in China, while preventing "big sales" of the dollar, but in the long run change is inevitable.

"A sustained recovery in the euro area, a substantial reduction of tariffs on imports from China and a decrease in the Fed's rate - obvious risks for the dollar downwards" - the document says.

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