The rate of the US dollar is an exciting and intriguing topic for lots of people. Today we will discuss the situation around this most popular global currency, the reasons for and consequences of what is going on.
So, what is it with the buck?
On December 3rd, Bloomberg published a thrilling article about the USD. Firstly, this currency is falling in pairs with other national currencies, according to the Bloomberg Dollar Spot Index. Secondly, it has been falling for seven months already. Thirdly, this negative trend is likely to remain in force at least until the end of 2020.
Could you give more details about the index?
Bloomberg Dollar Spot Index demonstrates the ratio of the USD vs a combination of 10 other currencies that includes the euro (EUR), yen (JPY), Canadian dollar (CAD), Mexican peso (MXN), Great Britain pound (GBP), Australian dollar (AUD), Swiss franc (CHF), South-Korean won (KRW), Chinese yuan (CNY), and Brazilian real (BRL).
How deep has it fallen this year?
- In pair with the CHF – by 9.93%
- EUR – by 8.8%
- KRW – 8.52%
- AUD – 7.85%
- CNY – 7.19%
- JPY – 4.64%
- CAD – 2.54%
- GBP – 2.59%.
What are the reasons?
Analysts say that the USD is pressed down by the hopes for the recovery of the global economy, and this hope is provoked by the plans of the US government to stimulate the economy of the States.
Good news from pharma companies working on the vaccine against Covid-19 is heating up the anticipation. Another reason is the swift revival of the Chinese economy.
What are the forecasts?
Experts promise that in the nearest future the USD will go on falling and the situation will hardly change. Jerome Powell, the head of the Federal Reserve System, supports this view: he announced that the Fed will keep the rates low until the crisis, provoked by Covid-19, ends.
In Malayan Banking they advise to rely on the AUD and KRW, in Credit Suisse Group AG – on the EUR, in Goldman Sachs Asset Management – on the CNY, JPY, and EUR.
Summing it up
In the middle of November, Bloomberg made it known that in October, the USD lost its title of the most popular currency for SWIFT payments and transactions, giving it to the euro, for the first time since 2013.
And now Bloomberg says that the dollar has been falling for seven months against other global currencies, and explains it by the recovery of the global economy. To put it shortly, the dollar has been falling and will carry on with this.