fall of the dollar against the euro will continue in the short and long run, as the recovery of the global economy reduces the attractiveness of dollar-denominated assets to investors, informs Bloomberg referring to analysts' predictions.
Macroeconomic factors will have a downward pressure on the dollar, as the recovery gathers momentum, analysts say Pacific Investment Management Co. (Pimco), Richard Klarida. Among the factors the expert including a huge U.S. budget deficit and expectations that the Fed will keep the base interest rate at zero in a long time, as well as the ability to re-deepening recession in the United States.
Organized falling dollar may help restore the balance of world investment portfolios, if, as expected, the further diversification of global investment flows (both public and private) in relation to a departure from the dollar, - considers Klarida.
Continued depreciation of the U.S. national currency would adversely affect the U.S. economy, experts say Pimco.
However, a professor of economics at Harvard University Niall Ferguson does not agree with this view: in his opinion, a weak dollar - the most simple solution to most American problems at the moment.
In the next 2-5 years will become cheaper dollar to the euro by 20% and renovating historic low quotations, predicts Ferguson.
However, the weakening of the dollar is terrible news for virtually all other economies in the world except the United States and China, said Ferguson. China, which has consistently inhibits the growth of the value of the yuan, to intervene to prevent the fall of the dollar to its national currency, added the economist.
Economists expect the current account deficit balance of payments will increase to 3,2% of GDP in 2010 and 3,3% of GDP in 2011 to 2,9% this year. U.S. budget deficit rose to an unprecedented $ 1.42 trillion for the 12 months ended 30 September 2009, according to the Ministry of Finance. The results exceed the previous record of nearly threefold.
Dollar goes against the euro on Monday to $ 1.4885, compared with $ 1.4905 at the end of the trading session in New York on Oct. 16.
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