Al Mayadeen English

  • Ar
  • Es
  • x
Al Mayadeen English

Slogan

  • News
    • Politics
    • Economy
    • Sports
    • Arts&Culture
    • Health
    • Miscellaneous
    • Technology
    • Environment
  • Articles
    • Opinion
    • Analysis
    • Blog
    • Features
  • Videos
    • NewsFeed
    • Video Features
    • Explainers
    • TV
    • Digital Series
  • Infographs
  • In Pictures
  • • LIVE
News
  • Politics
  • Economy
  • Sports
  • Arts&Culture
  • Health
  • Miscellaneous
  • Technology
  • Environment
Articles
  • Opinion
  • Analysis
  • Blog
  • Features
Videos
  • NewsFeed
  • Video Features
  • Explainers
  • TV
  • Digital Series
Infographs
In Pictures
  • Africa
  • Asia
  • Asia-Pacific
  • Europe
  • Latin America
  • MENA
  • Palestine
  • US & Canada
BREAKING
Israeli media: Strategic location in the south likely hit
Israeli media outlet: Reports of missiles falling in at least 7 areas, including Askalan, Safad, and Isdud
Israeli media: Sirens sounding non-stop across 'Israel' with explosions heard throughout the area
Sirens sound again in the south
Israeli media platform: About 4 missile salvoes were launched across 'Israel'
Israeli media: An additional missile salvo was identified from Iran, this time toward the north
Israeli media: Explosions heard in al-Quds and HaShfela
Israeli media: Another salvo of missiles was also identified being fired toward the south
Israeli media: Another salvo of missiles was identified toward the center and al-Quds
Home Front Command: New missiles detected en route to 'Israel'

Investors' 4 possible reasons for continued USD devaluation: Bloomberg

  • By Al Mayadeen English
  • Source: Bloomberg + Al Mayadeen English
  • 24 Apr 2023 18:27
  • 1 Shares
5 Min Read

A Bloomberg report highlights reasons as to why investors, based on a survey, believe the USD will continue to slide downward, drawing back on references from the 2011 showdown.

  • x
  • The seal of the Board of Governors of the United States Federal Reserve System is displayed in the ground at the Marriner S. Eccles Federal Reserve Board Building in Washington, Feb. 5, 2018. (AP)
    The seal of the Board of Governors of the United States Federal Reserve System displayed on the ground at the Marriner S. Eccles Federal Reserve Board Building in Washington, Feb. 5, 2018 (AP)

Professional investors anticipate a further decline in the value of the dollar from its two-decade highs reached last year, a Bloomberg report explained, as the market has underpriced the Federal Reserve's impending easing cycle.

According to the most recent MLIV Pulse survey, 87% of 331 survey participants anticipated the Fed to drop interest rates to 3% or below as part of a loosening that 40% believe could begin this year. In contrast, market pricing places the estimated policy rate in two years at about 3.05%.

With a 17 percentage-point gap difference between bears and bulls, Bloomberg reported, professional investors, like most survey correspondents, are bearish on the dollar; meaning that they are associated with falling share prices in the stock market.

Several investors clearly indicated that they are negative because the yield path is priced excessively high. The second most common response, which is interesting, predicted that the US would experience the majority of the financial sector's difficulties. This suggests that the Fed will be obliged to adopt a more dovish stance, as opposed to a hawkish standpoint, than its global counterparts.

Moreover, the Bloomberg report cited historical precedent for the Fed's current decision-making process in which the Fed made significant cuts without other central banks following suit. Early in the 2000s, it said, during the tech crash, and in the year before Lehman Brothers went bankrupt, US monetary policy sharply deviated from that of its international counterparts.

In the latter scenario, pertaining to the Lehman Brothers, the Fed dropped interest rates by 325 basis points between August 2007 and April 2008, while the ECB notably raised rates by 25 basis points in July 2008 – a time when the dollar was extremely weak before the Lehman collapse. 

Global policies and impact

It is worth noting, as revealed in the Bloomberg report, that the pessimistic view toward the dollar is grounded in the belief that the appreciation of either the yen or yuan will be the primary cause for the decline of the dollar.

Within a decade, Bloomberg reported, a majority of respondents claimed that the dollar has made up less than half of the global reserves. As such, investors, globally, expect a greater pivot away from the USD, forcing them to give the possibility more serious consideration.

Related News

White House denies Bessent tipped to replace Fed Chair Powell

Fed official suggests rate cuts possible if Trump tariffs are removed

However, Bloomberg's report underlined that market bulls continue to be proponents of the dollar, notably within the retail sector. That being said, the Fed rate path has actually been underpriced, according to a sizable majority of market bulls, supporting the idea that achieving the right policy decision will ultimately be determined by the direction the currency takes.

Surprisingly, Bloomberg highlighted, the threat of a debt-ceiling default continued to be virtually entirely ignored. Few would disagree, though, that the political climate has become exceptionally contentious and that the risks are as high as they have been for many years. The greatest benchmark to use to predict market movement once it is faced with a severe catastrophe goes back to the 2011 showdown. Yields had fallen dramatically at the time, but the dollar had gained as risk aversion dominated investors' decision-making.

US to intervene in the market to counteract non-bank financial firms

On April 21, US Treasure Secretary Janet Yellen announced that the US will adopt increasingly interventionist policies to mitigate risks posed by non-bank financial firms.

"We are proposing revisions to certain elements of the Council’s [FSOC] existing guidance that have made it difficult to use its nonbank designation authority," Yellen said. 

"The designation tool serves as an important part of our post-Global Financial Crisis defense. It is an important preventative tool to address systemic risks that may arise from a nonbank financial firm whose activities or distress could threaten the financial system. We are acting today to restore the effectiveness of this authority."

The collapse of SVB and Signature Bank, last month, shook the American market causing instability in the banking industry. A close inspection showed that the collapse was caused by poor administration which prioritized short-term profits.

Yellen stressed that the Financial Stability Oversight Council (which is staffed by prominent financial regulators including Yellen herself) needs to remove "inappropriate hurdles" to subject all non-bank financial firms to supervision.

"The March banking turmoil demonstrates that more work is needed to strengthen the regulatory and supervisory regimes," she added.

Yellen noted, however, that the banking system has eventually stabilized since the crisis last March.

Nevertheless, the FSOC needs to remain vigilant and closely monitor financial system conditions.

Read more: Over $68 billion withdrawn from Credit Suisse ahead of UBS takeover

  • Federal reserve
  • Yuan
  • US
  • Yen
  • de-dollarization
  • United States Dollars

Most Read

Iran launches 9th wave of Op. True Promise 3, destroys IOF air defense

Iran launches 9th wave of Op. True Promise 3, destroys IOF air defense

  • MENA
  • 17 Jun 2025
Rescue team work at the site where a missile launched from Iran struck Tel Aviv, Israel, Monday, June 16, 2025 (AP)

Wave 12 of Operation True Promise 3 launched, Sejjil deployed: IRGC

  • Politics
  • 18 Jun 2025
Israeli workers survey the site where a missile launched from Iran struck in Haifa on Sunday, June 22, 2025. (AP)

True Promise 3, wave 20: 40 missiles launched, Kheibar-Shekan in first

  • Politics
  • 22 Jun 2025
Iran launches missile barrage to Tel Aviv, casualties reported

True Promise 3, wave 14: Tel Aviv targeted, casualties reported

  • Politics
  • 19 Jun 2025

Coverage

All
The Ummah's Martyrs

Read Next

All
Secretary of Iran's Supreme National Security Council Ali Shamkhani, speaks with then-Syrian Prime Minister Imad Khamis in a meeting in Tehran, Iran, Tuesday, January 17, 2017 (AP)
Politics

Iran holds the initiative after nuclear strikes, Shamkhani says

Blood stains a religious painting inside Mar Elias Church, where a suicide bomber detonated himself in al-Dwela, on the outskirts of Damascus, Syria, on Sunday, June 22, 2025 (AP)
Politics

UN, regional governments condemn Damascus church bombing

A B-2 bomber arrives at Whiteman Air Force Base Missouri, Sunday, June 22, 2025, after returning from a massive strike on Iranian nuclear sites on Saturday (AP)
Politics

Israeli media: US-Israeli strike on Iran failed to end war

China UN Ambassador Fu Cong addresses the United Nations Security Council, Monday, March 24, 2025. (AP Photo/Richard Drew)
Politics

China slam US strikes on Iran nuclear sites

Al Mayadeen English

Al Mayadeen is an Arab Independent Media Satellite Channel.

All Rights Reserved

  • x
  • Privacy Policy
  • About Us
  • Contact Us
  • Authors
Android
iOS