US | US Dollar to regain some luster in 2021
While many commentators have been calling for a US dollar collapse, we believe the greenback will have a lot of staying power in 2021. In the wake of
extra-ordinary fiscal stimulus, favorable growth and interest rate differentials
should support a 3% year-over-year dollar appreciation by December 2021.
What you will learn about:
- After a predictable appreciation on safe haven flows and US dollar liquidity shortages in the early phase of the Covid crisis, the dollar fell back appreciably against emerging markets and advanced economies’ currencies.
- This unwind reflected less favorable growth and monetary policy differentials, along with reduced political uncertainty after the presidential election and a risk-on trade.
- We believe the third Covid phase will be one of nuance for the US dollar.
BoK’s monetary policy to tighten even as hiking cycle ends
Even without rate hikes, central banks' monetary policies can effectively tighten if the nominal neutral rate falls below the policy rate. We expect this will be the case for the Bank of Korea this year, as the gap between the policy rate and the nominal neutral rate widens.Find Out More
China: Emerging green shoots in Spring, but not out of the woods
We now incorporate a faster recovery from the post-Covid exit wave and raise our 2023 full-year GDP growth forecast to 4.5% (from 4.2% previously).Find Out More