U.S. dollar to yield position to Asian currencies
Azerbaijan, Baku, July 29 / Trend , A.Badalova/
The U.S. dollar will considerably lose its position regarding the Asian currency soon, the western analysts believe.
"Widening growth differentials between Emerging Asia and the US should result in further gains in Asian currencies against the dollar over the next 12-18 months," International Economics of the British Capital Economics consulting company, James Lord believes.
However, with the worst of the financial crisis now past, emerging market assets are back in favour, he said.
"Asian currencies have already benefited," Lord said. "However, our forecasts for growth in Asia and the US point to scope for further gains."
Capital Economics expects the recovery in the US to be anaemic - they forecast GDP growth of just 1 percent in 2010 and around 2.5 percent in 2011, following a contraction of 3 percent in 2009. In contrast, the Asian economies already appear to be rebounding.
Analysts of Capital Economics expect Asian currencies in our index to rise by an average of 10 percent or so against the dollar.
However, official intervention by regional central banks has traditionally kept Asian currencies a bit weaker than economic fundamentals would suggest, Lord said. This pattern is likely to continue, particularly for the more heavily export-dependent economies as the global recovery disappoints.
However, the British company's analyst predicts the strengthening of U.S. dollar to 1.2 points to European currencies in 2010.
Morgan Stanley analysts believe that the rate of American dollar to the world currencies can fall by 10 percent by late 2010, and Chinese yuan will get more support from the traders.
Analysts of the Swiss UBS bank, in turn, do not rule out the possibility of moderate growth in U.S. dollar, but believe that the rapid development of China's economy could become a serious problem for the dollar. In the coming months, China's cutting the proportion of U.S. dollars in its reserves will have a strong impact on it in 2009-2010.
However, experts one of the largest U.S. bank Goldman Sachs believe that next 12 months, the course of American currency may strengthen, as the U.S. economy will recover. According to analysts, the dollar can grow by four percent in 2009.