Experts Anticipate Moderate Dollar Decline, Differing from November

Dollar Expected to Decline Moderately in Comparison to November, According to Experts

Source: THE WALL STREET JOURNAL

Reasons for Anticipating a Gradual Adjustment

Experts believe that the decline in the value of the dollar will not be as steep as the significant drop observed in November 2022. Several factors contribute to this expectation:

• The dollar is not considered to be overvalued compared to its past performance.
• The yield advantages of the dollar have strengthened, providing support for its value.
• Asia has experienced a smoother economic recovery without significant aftershocks, while Europe has avoided energy deflation aftershocks, further mitigating the potential decline.

Past Performance and Current Outlook

In November 2022, the DXY dollar index experienced a substantial decline of over 10% from its level above 112. This decline continued until early February 2023, when the index dropped below 101. On Monday, reflecting the recent decline in the value of the dollar, it reached its lowest point at 103.4670.

Expert Analysis and Forecasts

According to analysis by Joy Chu, HSBC’s Head of Asia Foreign Exchange Research, the current decline in the value of the dollar is not expected to reach the same level of severity as observed in November 2022. The anticipated adjustment is predicted to be milder, less significant, and more gradual. It is also expected to have a minimal impact and shorter duration.

While the exact trajectory of the dollar’s decline remains uncertain, experts do not anticipate a sudden, prolonged, or drastic decline similar to that of November 2022. The dollar’s yield advantage and relatively low overvaluation contribute to these cautious expectations.

Monitoring Dollar Movements and Assessing Potential Impact

As the situation continues to evolve, it is important to closely monitor the movements of the dollar and evaluate its potential impact on global markets and the economy.