Bank experts anticipate that the USD will remain weaker than other currencies due to persistent uncertainties from the coronavirus outbreak, a stumbling US economy, and a rise in USD money supply.
The coronavirus’s effect on the USD exchange rate?
The uncertainty surrounding the coronavirus pandemic has increased volatility in the currency markets. Normally, safe-haven currencies like the US dollar, Swiss franc, and Japanese yen could rise. In the meantime, commodity currencies like the AUD, NZD, CAD, and ZAR may see their exchange prices plummet.
The dollar is expected to stay weak against other currencies in the future.
Will the dollar continue to be weak for the remainder of 2022?
Let’s examine a few reasons why the US dollar might increase from its present forecasted levels:
The coronavirus vaccination has been effectively provided, allowing the economy to continue normal operations.
Elections in the US government go off without a hitch, and political threats in the US are reduced.
The US economy improves, and the Federal Reserve (central bank) raises interest rates, bolstering the value of the dollar buy sell.
Non-US countries’ economic growth is slowing, and inflation is only gradually increasing, which raises the chances of an interest rate reduction outside the US.
China’s economy is growing faster than projected, boosting commerce and increasing demand, which raises
What effect does a weak US dollar have?
The United States has the world’s largest economy. This is why changes in the United States have a tremendous impact on all other currencies. Your home currency typically declines when the US dollar increases. When the US dollar falls in value, your native currency may strengthen. This isn’t always the case, though.
For instance, the euro declined significantly during the course of the year as the dollar rose in 2018. This was influenced by a number of variables.
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Comparison of Other Currencies with the US Dollar
Forecast for EUR/USD
Most bank analysts expect the EURUSD currency pair to progressively increase towards 1.2200.
Forecast for GBP/USD
As the coronavirus outbreak continues to weigh on the UK economy and Britain seeks to manage its exit (Brexit) from the Eurozone, banks expect the pound sterling to decline.
The New Zealand currency’s expected performance against the US dollar
According to bank analysts, the New Zealand dollar will continue to be under pressure. Most banks are expecting the NZDUSD to remain around 67-70 cents over the next few months.
Forecast for USD/JPY
The Japanese Yen has been firmer than expected in 2022, according to the banks. By the end of 2022, most banks expect the Yen to rise even more versus the US dollar, lowering the USDJPY exchange rate.
Conclusion
The US dollar (USD) has a high degree of volatility. The USD will remain lower than other currencies, according to bank analysts, due to persistent uncertainty from the coronavirus epidemic, a sinking US economy, and an increase in the USD money supply.