US Dollar to Keep Losing Its Appeal as Safe-Haven Currency of Last Resort, Says Strategist

Pacific Investment Management Company (PIMCO) expects the U.S. dollar to “continue to suffer its entreaty arsenic the safe-haven currency of past resort.” The $1.74 trillion plus absorption steadfast added that the USD “is apt to autumn further successful 2023 arsenic ostentation falls, recession risks decline, and different shocks abate.”

PIMCO Strategist Warns About USD

Pacific Investment Management Company (PIMCO) has predicted a important downtrend for the U.S. dollar this year. PIMCO had $1.74 trillion successful assets nether absorption arsenic of Dec. 31, 2022.

Gene Frieda, an enforcement vice president and planetary strategist astatine PIMCO, said successful a blog station past week:

We expect the USD volition proceed to suffer its entreaty arsenic the safe-haven currency of past resort.

“We judge hazard premiums volition diminution arsenic ostentation — and monetary argumentation volatility decline. New shocks are intelligibly a risk, but the hazard premium successful the USD (and cross-asset volatility) remains substantial, successful our view,” Frieda added.

“While higher yields intelligibly worked successful the dollar’s favour past year, immoderate forward-looking presumption indispensable besides instrumentality into relationship however the dollar was buoyed by the shocks of 2022,” the strategist explained, and “the grade to which they whitethorn abate successful 2023.” He noted that immoderate of the shocks were the Russia-Ukraine war, the spike successful vigor prices, and inflation.

The enforcement detailed:

PIMCO believes the dollar, which has depreciated since hitting a 20-year highest past September, is apt to autumn further successful 2023 arsenic ostentation falls, recession risks decline, and different shocks abate.

PIMCO believes that “the dollar’s output vantage versus different developed economies volition narrow” implicit the coming months, Frieda said. “Given the faster gait of cumulative complaint hikes connected the mode up, the USD’s output vantage is apt to autumn successful the aboriginal stages of a rate-cutting cycle, adjacent if the dollar sustains its comparatively precocious yield.”

Do you hold with the PIMCO strategist astir the U.S. dollar losing its entreaty arsenic a safe-haven currency of past resort? Let america cognize successful the comments conception below.

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