Is the dollar going to fall in the near future?
In order to minimize the impact of the pandemic and quarantine restrictions, the U.S. government has introduced new monetary and fiscal policy rules. And despite such stimulation of the economy, the decline of the dollar is not expected yet. Sberbank Investment Research analysts assessed the stability of the American currency. They say that the dollar still holds the leadership in global trade turnover, but investors should review the instruments for investment.
Experts assume that by the end of this year, the dollar may sink to 70 rubles if the geopolitical tension subsides. Despite the fact that a number of analysts have previously talked about the value of the U.S. currency of 100 rubles, the prerequisites for this are not yet observed. Oil prices are stable in the range of $40, but there is a risk of new sanctions. Besides, at the moment the Russian government does not plan to strengthen the rouble. After the pandemic, the economy has suffered heavy losses and is recovering slowly. Therefore, additional expenses for strengthening the national currency will further load the budget.
Last week the dollar fell in price against some major currencies. This result is due to the fear of a decline in the U.S. economy. After the Federal Reserve announced the preservation of the prime rate in the range of 0-0.25% until 2023, the rate went up. According to experts, the reason for the dollar decline was the introduction of various programs to stimulate the economy, both by the Federal Reserve and the government.
The government’s financial support program has increased liquidity in the real sector of the economy. Moreover, these stimuli were higher in the U.S. than in the European Union, which was one of the factors behind the weakening of the U.S. currency.
According to analysts, if the Fed continues the existing monetary and fiscal policy, which will increase inflation, further weakening of the dollar against the euro can be expected. However, a significant collapse of the U.S. currency is still unlikely.
It should be noted that the dollar index, which shows its dynamics relative to other currencies, has been quite volatile in recent months. The U.S. economy is not recovering as fast as the authorities would like it to, with the country lagging behind the other G20 countries.
But the Fed will soon change its policy of quantitative easing, and the dollar will not collapse. So far, the U.S. money is forecast to fall in the range of 5%. In turn, the decline of the dollar will benefit other currencies, primarily the euro and developing countries.
To strengthen the dollar, the Fed will soon adjust further stimulus programs. Tense relations between the U.S. and China are a limiting factor.