Deltec's Think About This - '$ Down... But Not Out | Page 2

Think About This
INVESTMENT RESEARCH
EXECUTIVE SUMMARY
The recent narratives describing ‘the Death of the Dollar’ are sensationalist.
There are good reasons for Dollar weakness: falling interest rate differentials, $ swap lines, and diverging
growth prospects. But we don’t think any are terminal.
The scale, liquidity and status quo advantages of the Dollar will take years to undermine, even if present
circumstances persist (slowbalisation, Sino-US tensions and QE infinity).
The universal debasement of fiat currencies through financial repressions and the crushing of real
interest rates makes alternatives such as precious metals and digital assets one of our highest conviction
calls.
Nevertheless, we expect the Dollar to be a haven when volatility next spikes.
Market chatter about the ‘Death of the Dollar’ has picked up in recent weeks. Weakness against other
major currency crosses in the last couple of months has commentators pondering the demise of the
greenback as the global reserve currency. We think this narrative is sensationalist; the drivers of recent
underperformance are multifaceted and are far from terminal.
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