Despite the dollar’s recent rise to eight-month highs against the euro, it’s headed for a multi-year drop against other currencies, says NYU economist Nouriel Roubini.
The greenback will fall 15 percent to 20 percent against Asian and commodity currencies, such as the Brazilian real, over the next two to three years, the New York University professor said at a recent conference, Bloomberg reports.
“I see anemic recovery of economic growth in the United States, and the United States’ current account deficit is still very large,” he said.
“In the next two or three years, the dollar has to weaken further on a trade-weighted basis.”
The U.S. trade deficit totaled $381 billion last year.
The U.S. economy grew 5.7 percent in the fourth quarter, and that trend will last for a little longer before the economy stagnates, Roubini says.
“There’s going to be better economic news out of the United States due to temporary factors, such as restocking, fiscal stimulus, and base effects,” Roubini said.
“In the second half, economic weakness is going to reappear. On a trend basis, the dollar has to weaken.”
Hedge fund legend George Soros says the United States should favor a decline of the dollar against the Chinese currency, the renminbi.
“The United States would actually benefit from a higher renminbi,” he told CNBC.
“It would help by making U.S. exports more competitive to China, but also would help to introduce an element of inflation in the United States. In the current circumstances that would be very helpful,” Soros said.
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