Over the last few years, the world economy has gone through some tumultuous times when multiple countries have registered massive losses in their stocks. The United States and Europe were the focal points of the financial world since most market trends have originated from the aforementioned regions.
Although the US and countries in Europe were seen as stalwarts in space, a pattern has emerged where both the dollar and the pound have fallen below the expected standards. Caitlin Long, Chief Executive Officer [CEO] of Avanti, recently spoke about how the dollar’s dominance was waning much like that of the pound in the 20th century.
Analysts claimed that the dollar was seeing a dip because of a pattern of over-consumption. This was due primarily to expansion into other countries where the dollar was set as the standard for any trade or exchange. It has been the reason why countries need to be cautious about the fall of the dollar as it can also impact their native economies. Speaking on the prevalent issue, Caitlin Long was quick to point out that the US would soon pay reparations if corrections were not made quickly.
Long’s tweet on the dollar discussion read:
IT WAS ONE HELLUVA PARTY for US (& Europe) for >50 years—we consumed more than we produced & hangover has now begun. It seems the dollar is having one more short squeeze higher (predictable). Will “almighty dollar” then go by the wayside, just as “sound as a pound” sterling did?
— Caitlin Long 🔑 (@CaitlinLong_) March 18, 2020
On Thursday, the dollar suffered a loss when the NSE fell by 3.88 percent. This was on the back of the US Federal Reserve’s decision to open the door to monetary easing, with a majority losing hope that the economy would recover anytime soon. The silver lining in the situation was that the positive COVID-19 drug tests boosted the hunger for riskier assets.
A cursory analysis of the economy has shown it may take several months before the US market recovers. As the Federal Reserve pumped more money into the market, the dollar was seen to be progressively weaker. Researchers added that the dollar/yen pair could drift lower soon, with the euro benefiting from the fall.
On Thursday, the dollar traded for 106.72 yen in Asia, while the currency was $1.2455 against the dollar. The US Federal Reserve was also in the news recently after a two-day policy meeting on Wednesday. According to reports, the Fed has decided to keep interest rates close to zero while planning to expand the emergency program across the country. Economists predict that the second quarter of 2020 would be even worse as some countries plan to extend ongoing lockdowns.
Asian countries have maintained a steady pace in comparison to American markets. China has been one of the main leaders asserting its hold on the financial sphere as more and more developments continue to take place within the country. Several provinces in the Red Dragon have begun to ease the lockdown of their economy, and the Renminbi is expected to bounce soon.