Recent USD weakness does not reflect replacement by other currencies – BofA
Analysts at Bank of America (BofA) disagree with the dollar replacement thesis recently put forward by Goldman Sachs and other market experts.
“The recent Dollar weakness does not reflect USD replacement by other currencies, none of which meet reserve currency requirements,” BofA strategists said, according to popular analyst Holger Zschaepitz.
Indeed, high fiscal debt and ultra-loose monetary policy is not a US-specific problem. The Eurozone, UK and Japan are also battling similar issues. As such, major currencies like the EUR will likely have a tough time building reputation as the global reserve.
Goldman Sachs warned last month that gold may eclipse the dollar as reserve currency after outsized coronavirus spending. The yellow metal rose to a record high of $2,075 per counce earlier this month and was last seen trading at $1,950 – up nearly 35% from the low of $1,450 seen in March.
Meanwhile, the dollar index has declined by nearly 10% from the high of 103.00 observed in March.
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