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Since May 2020, the dollar has depreciated against the euro, the renminbi, the yen and emerging currencies, as well as against gold and bitcoin. The persistence of the COVID crisis in the US, doubts over US leadership, which can be seen in the fall in Treasury purchases, stronger monetary expansion in the US than in other regions and the rapid increase in US external debt can be attributed to the USD depreciation, per Natixis.

Key quotes

“A stronger and more persistent deterioration in the US economy due to the COVID crisis, given the protracted health crisis in the United States.”

“Donald Trump’s international image has deteriorated further due to fresh tensions with China and COVID mismanagement; investors are also known to be concerned about Joe Biden’s tax agenda (sharp hike in taxes on capital). When we look at non-resident purchases of Treasuries, which may be an indicator of confidence in the US leadership, we see new purchases stopped in the summer of 2019.”

“Stronger monetary expansion in the United States than in other regions.”

“The rapid increase in the US external debt may also have caused the dollar to depreciate.”


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