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We are a hundred dollars.
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The dollar slides, and the pulsation affects other currencies has brought a combination of relief and headache central shore worldwide.
In recent weeks, uncertainty in the US politics has led to the US dollar and treasurers, and this year the dollar index has weakened more than 9%. Market observers see further decrease.
According to the latest Global Global Fund Bank American poll, 61% of participants have a dollar reduction in the next 12 months – the most pessimistic forecast of major investors in almost 20 years.
A Exodus with American assets It may reflect a wider crisis of trust, with a potential overflow, such as higher imported inflation when the dollar is weakening.
Most central banks will be pleased to see 10% -20% of the US dollar decline.
Adam’s button
Analyst of the main currency forexlive
The fall in Green Bur forced other currencies to evaluate it, especially safe shelters such as Japanese, Swiss franc, as well as the euro.
Since the beginning of the year, Japanese has strengthened more than 10% against the green appeal, while the Swiss Frank and the euro have been highly rated, according to LSEG.
In addition to safe shelter, other currencies that have increased against the dollar this year include Mexican peso, which is 5.5% to the dollar, and the Canadian dollar, which estimated more than 4%. Polish Zloti strengthened more than 9%, and the Russian ruble estimated more than 22% against Greenbek.
Some new market currencies, however, have been depreciated, despite the weakness in green.
Vietnamese Dong and Indonesian Rupee weakened a record low to the US dollar earlier this month. Last week, the Turkish lyre also reached a low time. The Chinese Yuan reached a record low to the dollar almost two weeks ago, but has since strengthened.
Breathing Hall for speeding?
Analysts have said analysts said analysts said analysts said analysts were a relief for governments and central banks around the world.
“Most central banks will be pleased to see 10% -20% of the US dollar decline,” said Adam Batt, the chief analyst in Forexlive. He added that dollar strength for many years was a stable problem and creating difficulties for countries with hard and soft dollar pegs.
With many developing countries that have great debt in dollars, a weak dollar reduces the real debt load. In addition, softer green and stronger local currency usually makes imports relatively cheaper, reducing inflation and thus allows the central banks to reduce the rate to increase growth.
A recent sale in US dollars offers more “respiratory hall” for central banks to lower the speed, the button said.
Dollar index last year
While stronger local currency can help tame inflation through cheaper imports, it complicates the competitiveness of exports, especially under the updated US tariff, where Asia is exposed to the world’s largest producer, Thomas RUPF said VP Bank for Singapore and the main investment director.
The devaluation of currency is likely to be more active in developing markets, especially in Asia, Nick Rice, head of Macro studies Monex Europe said.
However, these that develop markets and Asian central banks will need to pass a thin line to avoid capital flight and other risks.
“Developing markets face high inflation, debt and capital flight risks, making devaluation dangerous,” said Wael Macarem, financial markets lead to Exness.
In addition, the US administration may be considered a trading measure that can attract revenge, he added.
The developing economy can be reluctant to reduce rates as it may affect the debt of household households and firms that have borrowed from US dollars, Fitch Solutions Economics Alex Muscoteli said. The weaker currency can also lead to an outflow of capital in response to a decrease in differentials in the United States, he added.
For example, the Muscovites do not see that the Central Bank of Indonesia is too much reduced, given the recent instability of the currency, but refers to the fact that Korea and India may occur to reduce speed.
So far, it seems overwhelming action is the avoidance of the currency war that will only give greater instability of the local and world economy.
Brandan McCain
Wells Fargo
At his April meeting, the European Central Bank took the opportunity to reduce inflation to reduce the rates by another 25 basic points. The ECB said on Thursday that “most major inflation measures suggest that inflation will be settled around 2% of the Medium Time Purpose.”
Another example is the Swiss National Bank that has encountered a strong Frank over the last 15 years. Export of goods and services make up more than 75% of Switzerland’s GDP and a strong franc makes a Swiss item more expensive abroad.
“If the capital continues to come, you may have to take radical measures for devaluation,” he said. Investors are poured into Franco during uncertainty, for example, in recent weeks, strengthening Franco.
Central banks avoid devaluation – so far
The devaluation of the currency is the risk of increasing price growth, and the cash organs will be cautious that inflation remains above its goals.
The risk of increasing the inflation resulting from currency cushioning, as well as tariffs – as countries respond to the US fees – are likely to force the central banks reluctant to go on the way of voluntary devaluation, said Wells Fargo and FX strategist, brandan McCain.
In addition, while most foreign central banks theoretically have a bandwidth to weaken their own currency, the likelihood is still small in modern conditions, the strategist added.
Can the country devalue its currency on several factors: the size of its FX reserves, impact on foreign debt, trade balance and sensitivity to import inflation.
Swiss Franco’s performance last year
“Export-oriented countries with sufficient reserves and less dependence on foreign debt will have more space for devaluation, even they are likely to walk cautiously,” McKenna said.
A wider direction of trade negotiations will be key for how countries choose to act. In addition to China, several countries have shown their readiness to participate in trade negotiations, and if these negotiations lead to a decrease in tariffs, the central banks will not be so likely to pursue weak currencies, he added.
In today’s geopolitical climate, devaluation can also invite revenge and risk of allegations of currency, RUPF VP Bank said.
Although there is still a possibility that trade tensions can lead to more protectionist results, which will lead to central banks to devaluation their currencies.
“But so far, it seems, the preferred action is the avoidance of the currency war, which will only add greater instability of the local and world economy,” McKenna said.
