US dollar likely to face slump
The US dollar is approaching the moment of its slump. There are more and more factors that proved this inevitable event. On the one hand, the US government may lower the US dollar’s price in an attempt to protect its exporters. On the other hand, it is quite possible that it is a protective policy implemented by the White House.
Earlier, the existing currency market situation would have pushed the US Fed to take up a more cautious stance. However, at the moment, such actions may have catastrophic consequences due to the coronavirus pandemic. In other words, the US dollar lost the Fed’s support and its price largely depends on confidence in the global financial markets. In case of panic, bank depositors around the world may start closing their deposits in an attempt to reduce the risk of potential losses caused by changes in exchange rates. The US dollar is more exposed to this risk than all other currencies. Notably, foreigners own about $25 trillion in guaranteed securities, short-term obligations, and bank deposits while Americans have less than half of this amount.
If global trading does not revive, foreign companies will have to convert dollars into their national currencies. Some companies will even have to sell bonds. In fact, several organizations have been already pushed to do so. And the US dollar strongly reacts to such events.