Improved economic fundamentals outside the US have coincided with the dollar’s sharp fall since last September, narrowing the greenback’s substantial overvaluation. But we still think that it remains somewhat stronger than warranted by fundamentals. While we expect the dollar’s “fair value” to continue to edge lower over the next couple of years, we think recessions in advanced economies will mean that “safe-haven” demand drives the dollar higher in the near term. In other words, we think it will stay somewhat overvalued through the remainder of this year.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services