The US dollar is facing stiff competition from global currencies and the BRICS alliance is aiming to topple the USD. While the US dollar is battling to survive, other currencies, including BRICS have ganged up against the USD. The battle of the currencies will continue throughout this decade leading to market volatility.
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BRICS: Scotiabank Predicts US Dollar Will ‘Fall’
In the battle of currencies, the US dollar is most likely to “fall”, predicts a new report from Scotiabank. The forecast indicates that the US dollar will fall the most in 2024 and continue its downward trend thereafter. The development gives ammunition’ to BRICS and other local currencies to replace the US dollar as the world’s reserve.
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Scotiabank wrote in its report that the US dollar will find it hard to remain sustainable in the global markets from hereon. The competition is stiff and more than 20 countries are aiming to bring the US dollar down. The bank wrote that the US dollar spiked 28% in 10 years but might not repeat the feat in the next decade.
“In real effective terms, the USD has appreciated significantly (around 28%) over the past ten years,” the bank said. It added that replicating the feat in the coming years will be a difficult task due to robust geopolitical changes.
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“Scope for additional USD gains may be limited in the medium to longer run and its elevated valuation leaves it prone to a correction, particularly as structural headwinds continue to strengthen. Regardless of the USD’s strong start to the year, we still expect it to soften over the balance of 2024 versus the core majors,” said Scotiabank.
