Since the beginning of the year, the US dollar has depreciated by about 10% against the euro, and again by 3-4%. It is a very unusual behavior of the foreign exchange market in the context of a severe crisis, Report says, citing Izvestia.
According to economist Stephen Roach, this is a sign of a long-term decline in the dollar. First, it is affected by the growing US trade deficit. The second major factor is the extremely low level of deposits in the United States. He believes that the dollar is susceptible to various shocks. Besides, large budget deficits that will be inevitable in the next few years will raise pressure on US currency.
The federal budget deficit is estimated at 16% in 2020 and 8.6% in 2021, excluding the next round of fiscal stimulus. Despite this drop, the dollar's real effective exchange rate is 27% higher than the 2011 minimum.
Roach noted that the dollar's depreciation against major currencies could reach 35% by the end of next year. It means that the euro will approach the level of $ 1.5.
According to Mansour Mohiuddin, chief economist at the Bank of Singapore, the yuan's significant strength against the dollar this year is a sign that the dollar will weaken in the future. Ulf Lindal from A.G. Bisset estimates that the dollar may lessen by 36% against the euro next year. Analysts at Goldman Sachs predict that the main direction of the dollar will decline shortly: by 2023, the euro will be worth $ 1.3.