Recorded at 10:00 a.m. in London on Thursday 30th April
In this “Fireside Chat,” Gavyn Davies, Founder and Executive Chairman and Andy Bevan, Partner and Economic Advisor, discuss the following:
- The dollar is currently overvalued by approximately 20% against other major currencies according to our models
- Twin budget and current account deficits pose significant risks to the dollar’s long-term valuation, but the confirmation of Kevin Warsh as new Fed Chair would imply monetization of debt is unlikely
- The U.S. equity market’s dominance and “safe haven” demand provide temporary support for the dollar
- A trend of declining foreign ownership of U.S. Treasuries and a shift away from the dollar in central bank reserve holdings highlight longer-term diversification trends
- The provision of swap lines to the UAE indicates the desire of the US to keep the dollar at the centre of the international monetary system
- This week’s FOMC meeting also underlines that monetary policy will not undercut the dollar in the short-term
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