Stephen Roach: The dollar's crash is only just beginning

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By Stephen Roach
Bloomberg News
Monday, January 25, 2021

After an initial spike higher, the dollar has been falling steadily since the Covid-19 pandemic took hold in the U.S. last March. It is down about 10 to 12% relative to America's major trading partners, dropping to its weakest levels since early 2018 as measured by several of the broad dollar indexes. There is more to come.

... Dispatch continues below ...



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Based on a wildly unpopular forecast that I made in June of a 35% decline in the value of the dollar by the end of 2021, we are only in the third inning of a nine-inning baseball game. If that forecast comes to pass, it will provide an important exclamation point on the first year in office for America's 46th president, Joe Biden.

There were three main reasons why I argued the dollar would fall: 1) a sharp widening in the U.S. current-account deficit, 2) the rise of the euro, and 3) a Federal Reserve that would do little in response to any weakness in the greenback. On each of these counts I have greater conviction on the weak-dollar call today than I did six months ago. Consider the following: ...

... For the remainder of the analysis:

https://www.bloomberg.com/opinion/articles/2021-01-25/the-dollar-s-crash...

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