US Dollar Tipped To Fall 35%, Big Advantage Foe CE & Audio Importers
Australian importers especially consumer electronics and appliance distributors are facing a volatile dollar with one US expert tipping that the US dollar that is the benchmark for the industry is in for a volatile ride falling as much as 35%.
If this happens the Australian dollar could rise significantly.
Stephen Roach, Yale University senior fellow and former Morgan Stanley Asia chairman claims that the era of a strong US dollar may be coming to an end and is forecasting a 35% decline soon in the US currency against its major rivals, citing increases in the nation’s deficit and dwindling savings.
The lecturer said during CNBC’s “Trading Nation” that the rise of China and the decoupling of the US from its trade partners is setting the stage for a dramatic weakening of the US currency in the next few years that is likely to end the supremacy of the monetary unit as the world’s reserve currency.
“The dollar is going to fall very, very sharply,” he told the business network.
He claims that US economy is already “stressed” by the impact of the COVID-19 pandemic and suggested that the recession that has gripped the US in February amid the public health crisis will only amplify the dollar’s woes.
The finance expert said that the rest of the “world is having serious doubts about the once widely accepted presumption of American exceptionalism.”
He suggests that dollar pundits may turn to the Chinese Yuan, as Beijing goes through a phase of structural reforms that could shift the country’s manufacturing-heavy economy to one focused more on services and one with greater consumer-led growth.
Roach makes the case that although a weaker dollar, sometimes favoured by President Donald Trump, would benefit US exports in the short term, it would prove more problematic over the longer term.