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The Dollar Index Predicted to Decrease by 20 Percent by the Expert


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Moscow, May 2 – The dollar index, which reflects the exchange rate of the dollar against a basket of currencies of six countries – trading partners of the United States, is entering a long-term downward trend (the fourth in the past fifty years) and is possible within a month or two. Managing Director of the News Agency MI Achkasov & Co Maxim Achkasov commented on the 100-point round level, which has been above it since April last year, and the overall decline in the indicator may be 20%.
Analysts at Bank of America concluded in a review for clients that the US dollar has entered its fourth multi-year negative trend in the past 50 years. Thus, at the beginning of 1971, the dollar index began to decline from the level of 120 points to 82 points in October 1978. The next peak was in February 1985 (just under 165 points), and the bottom was in September 1992 (about 78 points). The third cycle lasted from July 2001 (121) to March 2008 (71 points down). Finally, the fourth cycle of dollar decline began last September at 114.8 points.
Bank of America colleagues are undeniably right: the chart of the dollar index clearly shows the beginning of its multi-year weakness. The chart indicates that the index could breach the psychological 100-point level in the next month or two and accelerate the decline as the national debt ceiling of the United States is reached, which is What might happen in the summer of 2023. The situation for the dollar today is unique: de-dollarization is accelerating. And it is impossible to predict how low it will be in this cycle, ”says Ashkasov.

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The expert believes that there are several reasons for this fall. He points out that “the possible decrease in interest rates by the US Federal Reserve leads to a decrease in investor interest in dollar assets. The expected recession of the US economy in 2024 may further weaken the dollar’s position.”
“The dollar is now overvalued and is currently trading 19% higher than its fair value under the purchasing power parity model. Thus, the greenback could weaken by 20% against a basket of major currencies – to the region of 80 points in the dollar index as part of a cycle The landing that has begun.”, Ashkasov sums up.

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