The dollar has further to fall; chief economist at Goldman Sachs

Demand for US assets cannot keep up with supply without a weaker currency

I admit it: I often dodge questions about the dollar. A large body of academic literature and my own experience as an economic forecaster have taught me that predicting exchange rates is even harder than predicting growth, inflation and interest rates.

But with all due humility, I believe that the recent dollar depreciation of 5 per cent on a broad trade-weighted basis has considerably further to go.

the real value of the dollar still stands nearly two standard deviations above its average 

A decision by non-US investors to reduce their US exposure would thus almost certainly result in significant dollar depreciation.

Dollar depreciation should not be confused with loss of the dollar’s status as the world’s dominant currency. 

We have had large exchange rate moves without loss of the dollar’s dominant status in the past, and our baseline expectation is that the current move will be no different.

Jan Hatzius Financial Times 24 April 2025

The writer is chief economist at Goldman Sachs

https://www.ft.com/content/976e2798-f9db-46c6-9582-fe237c572f28


Tillbaka till Rolfs länktips 24 april 2025

https://englundmacro.blogspot.com/2025/04/rolfs-lanktips-24-april-2025.html





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