The Dollar could be on a downward trend

The Dollar could be on a downward trend

The most valuable currency in the world could lose its place.

The recent events have impacted not only people and businesses but, by extension, the currencies. Since the pandemic started until now, the world's most valuable currency, the US Dollar, kept its steady position over the past few months.

But in the long run, things don’t look too rosy. According to Stephen Roach, the Dollar is on its way down. The fall would be dramatic – up to 35% against other major currencies. Global changes and the U.S. debt reaching World War II levels seem to be the main culprits.

The Dollar Index gained more than 1% in the last couple of weeks, but experts believe it will fall as the national savings rate will continue to drop. The drop could happen in the next two years, probably more. If the inflation rate gets higher due to the high cost of imported goods, the interest rates could be affected negatively. Moreover, if the price of imported goods rises, that could lead to an increase in oil prices.

The analysts were looking at a 1970s kind of stagflation when the economic growth stopped, but prices kept on rising.

The predictions are grim for the Dollar, and a future power change in November might not help things for the better.

Even today, the Dollar fell against the EUR by 2.1%. USD/CNY remained steady at 107.35. GBP/USD gained 0.2%.

Sources: cnbc.com, the balance.com, reuters.com


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