The US dollar has been one of the main beneficiaries of this year’s events, but BCA expects the dollar to peak in 2025, due to coordinated policies to limit its strength.
The dollar index, which tracks the greenback against a basket of six other currencies, fell 0.1% to 106.280.
However, the index is up more than 5% so far this year, thanks to outperformance in US growth, as well as the threat of tariffs in the wake of Donald Trump’s presidential election victory this year.
“However, odds are increasing that the trade-weighted US dollar will decline next year,” analysts at BCA Research said in a note dated December 11. “While the exact timing of the dollar’s peak is uncertain, we believe it will be in the first half of 2017.” 2025″.
The investment research firm said that the Trump administration will actively try to devalue the dollar, because job creation in the US manufacturing sector requires either high import tariffs or a significant decline in the value of the dollar.
A policy that reduces the value of the dollar is a better option than one that imposes trade barriers, and the former would increase the competitiveness of manufacturing industries in the United States without causing any negative impact on companies and investors.
The think tank believes the Trump administration will use the threat of extremely high tariffs to force other countries to raise the value of their currencies.
While appreciating their currencies in the face of weak domestic growth is contrary to their economic interests, Europe, Japan and China will agree to upward adjustments of their exchange rates from very low levels to avoid high US tariffs on imports.
