Is US Dollar’s era coming to an End? || Are we seeing the collapse of the Dollar

Could the end of the US dollar be near?
Investors are beginning to reposition their portfolios to capitalise on the US dollar’s era of strength coming to an end by mid-2023.

The comments came despite the statement that the US central bank needed to raise interest rate further and hold them throughout next year and into 2024 to tame inflation.

deVere’s founder Nigel Green, said that the dollar regained some ground, following the hawkish tone from the Fed, and it seemed that the Federal Open Market Committee (FOMC) was heading toward stepping down to 0.5 percentage point increase in December, following four consecutive 0.75 percentage point hikes.

“Against this backdrop, investors are now trimming bets on aggressive Fed tightening as inflation is gradually tamed, which means the dollar will not be as attractive,” Green said.

“The greenback has been all-powerful this year, up around 14% compared to a basket of currencies, because it’s still considered a safe-haven in times of market volatility.

“Almost all relative economies have raised interest rates, the Fed has raised them far higher, implementing one of the most aggressive rate hike cycles in modern history – primarily because the U.S. economy could withstand it.”

At the same time, Green stressed that For U.S. companies, including most on the S&P 500, a strong dollar would hit their foreign profits when moved back into dollars, putting corporate earnings under pressure.

Also, the strong US dollar would put the American international competitiveness at risk, with products becoming more expensive abroad while the US financial assets, such as stocks and bonds, would become less attractive to global investors.

In addition, both developed and emerging markets globally were hit by a powerful greenback as it fuelled inflation and raised the cost of imported goods.

Green said that it also added to the need for some central banks around the world to tighten their own financial conditions.

“Always looking ahead, investors are now seriously looking at other currencies as the dollar’s strength appears to be waning,” he concluded.