Washington
An accelerating decline in the US dollar is reverberating around the world, adding fuel to a global momentum rally that has boosted prices for everything from technology stocks to gold. The US dollar index, which measures the greenback against six other major currencies, is down around 9 percent from its March highs and is on track for its worst month since 2011, pressured in part by expectations that the United States will take a bigger hit to growth than other economies from the coronavirus pandemic.
Because of the dollar’s central role in the global economy, a sustained sell-off in the greenback could buoy a broad market rally driven by expectations of continued economic stimulus from the world’s central banks and governments.
At the same time, further dollar weakness would likely be an unwelcome development for economies such as Europe and Japan, as their own rising currencies threaten to weigh on growth and efforts to spark inflation.
“The weaker dollar is almost becoming a self-fulfilling prophecy, with gains for risk assets seeing the dollar weaken further, fueling additional gains,” said Michael Brown, senior analyst at payments firm Caxton.
The dollar is down around 3 percent year-to-date, after rising for each of the last two years. The greenback slid nearly 10 percent in 2017. –Reuters
