Jun 23, 2020 - Economy

Yale economist: Dollar will fall 35% "sooner rather than later"

Illustration of a hundred dollar bill as a flag at half mast 

Illustration: Sarah Grillo/Axios

Yale University senior fellow and former Morgan Stanley Asia chairman Stephen Roach is the latest to predict the end of the dollar's run as the world's dominant currency, telling MarketWatch in an interview Monday that his forecast for a sharp deterioration of the greenback could happen "sooner rather than later."

What he said: Roach predicts the dollar will soon decline by 35% against its major rivals. “This massive shift to fiscal stimulus is going to blow out the national savings rates and the current-account deficit,” he said, reiterating comments he made in a recent op-ed published by Bloomberg News on June 14.

  • In the Bloomberg piece, Roach argued the dollar's "downtrend could gather momentum in the years ahead, especially with the U.S. currently leading the charge in de-globalization and decoupling."
  • “In a COVID era everything unfolds at warp speed,” he told MarketWatch on Monday. He pointed to the contraction of the U.S. economy from an unemployment rate that was hovering around a 50-year low at around 3.5% in January to the highest unemployment rate on record in April.

The backdrop: Currency analysts and fund managers have been calling for the dollar to weaken materially for years, while top economists like former Bank of England governor Mark Carney have called for the world to diversify away from the greenback. But this hasn't yet happened to any meaningful degree.

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