How Low Can the Dollar Go? Thoughts from 12 Experts

Recently the dollar has seen troubled times. After reaching parity with the Canadian dollar and the offloading of US Treasuries from Asian countries, things just aren’t looking good. Find out what financial experts have to say about the dollar’s future.

  1. Paul Robinson, Barclays: "We expect it to get quite a bit weaker."

    The Telegraph reports, "Barclays expect the Fed to cut rates by another quarter point to 5pc in a move that further erode one of the dollar’s key props." Paul Robinson, strategist for Barclays, explains, "We’re dollar bears. The dollar is coming up for an important few weeks. We expect it to get quite a bit weaker." They believe that it’s possible the dollar could fall to $1.50 on the euro.

  2. Thomas Stopler, Goldman Sachs: "The data suggests there will be a weaker dollar."

    Thomas Stopler, economist for Goldman Sachs, predicts a troublesome future for the dollar. Based on the negative capital-flows situation, he interprets data to mean that "there will be a weaker dollar."

  3. Marc Ostwald, Insinger de Beaufort: "Woe betide US Treasuries if inflation does not remain benign."

    According to a report from The Telegraph, "data from the US Treasury showed outflows of $163bn (£80bn) from all forms of US investments." Mac Ostwald of Insinger de Beaufort finds these numbers "absolutely stunning," and warns that inflation could make things even worse for the dollar: ""Woe betide US Treasuries if inflation does not remain benign." $52 billion worth of the treasuries in the outflow are from Asian investors, including Japan, China, and Taiwan.

  4. Ian Stannard, Paribas: Data is "extremely negative."

    According to Ian Stannard of Paribas, things aren’t looking good for the dollar, as "it is not just foreigners who are selling US assets. Americans are turning their back as well." He believes that this situation "exceeds the worst fears," and ultimately, the data is "extremely negative" for the dollar.

  5. Rodrigo de Rato, IMF: "The dollar remains overvalued."

    Although the dollar has fallen quite a bit already, International Monetary Fund chief Rodrigo de Rato asserts that it’s still "overvalued relative to medium-term fundamentals." Digital Journal reports that the IMF hinted "the dollar may be headed for further decline," with the US trade deficit, slow-growing economy, and cut in interest rates to blame.

  6. Jerome Booth, Ashmore Group: "The dollar will keep falling in the near term no matter what."

    Jerome Booth isn’t optimistic for the dollar, either. He believes that it’s just not a good investment vehicle: "It’s a question of returns, and returns in dollar-denominated assets are simply very low when compared with other regions." Because of this, his prediction is grim, asserting that "the dollar will keep falling in the near term no matter what."

  7. Nick Bennenbroek, Wells Fargo Bank: Recent "strength in the greenback is corrective."

    In a note to clients, Wells Fargo currency strategist Nick Bennenbroek asserts that there’s still room for a greater dollar fall. He explains, "We do believe the greenback is consolidating and not too far from bottoming out, but today’s price action suggests there is still potential for some further weakness." According to Bennenbroek, recent gains in the dollar’s strength are "corrective."

  8. Michael Woolfolk, Bank of New York Mellon: "The dollar has further room to fall regardless of incoming US data."

    Senior Bank of New York Mellon strategist Michael Woolfolk seems to think data and opinionated buzz points to a weakening dollar. "Bearish dollar-sentiment appears to be solidly in place going into the weekend," he said. Because of this, Woolfolk thinks that, regardless of incoming US data, "the dollar has further room to fall."

  9. Alan Greenspan, Former Federal Reserve Chairman: China offloading of US Treasuries "won’t trigger any rapid drop in the US dollar."

    Greenspan doesn’t see doom in the dollar’s near future. Although China sales of US Treasuries are troublesome, he believes that "markets are clever enough not to overreact." He says this is old news, and doesn’t expect to see a large reaction. An attendee of Greenspan’s presentation reports his sentiment as, "It’s already-known information that won’t trigger any rapid drop in the U.S. dollar.”

  10. Eisuke Sakakibara, former top Japanese Ministry of Finance official: "We could see a plunge in the dollar."

    Eisuke Sakakibara is concerned that if US economic growth "fall[s] below 1 percent," the dollar may "plunge." This plunge, according to Sakakibara, would require intervention from the US, Japan and the EU to put a stop to it.

  11. Masashi Kurabe, Bank of Tokyo-Mitsubishi UFJ: "Negative implications for the dollar."

    Masashi Kurabe sees the possibility of stagflation, a period of both inflation and economic stagnation. "Economic data raise the question whether the U.S. economy will fall into stagflation,” he says. A period of stagflation could have "negative implications for the dollar."

  12. Mansoor Mohiuddin. UBS AG: "We continue to view dollar weakness as unsustainable."

    Mansoor Mohiuddin sees a positive future for the dollar, calling its current weakness "unsustainable." He believes that the G7 meeting will spark a resurgence of the dollar, explaining, "A strong G7 statement this weekend could be just what the dollar needs." Bloomberg reports UBS "predicted the dollar will rise 5.2 percent in the next three months as the Federal Reserve delays further interest rate cuts."

Despite a few experts with a positive outlook for the dollar, the general consensus reflects a future that doesn’t look good. According to these experts, there is room for the dollar to continue to fall, and currency traders should vigilantly look for political and economic indicators that could bring trouble for the dollar.