Why the US dollar may be entering bear territory – The National

Why the US dollar may be entering bear territory – The National

The greenback could test its July 2011 lows, weakening by as much as 35%. The era of the US dollar's "exorbitant privilege" as the world's primary reserve currency is coming to an end.. For almost 60 years, the world complained but did nothing about it.. Covid-19, and the economic crisis it has triggered, is stretching this tension between saving and the current-account to the breaking point.. In the first quarter of 2020, net national saving, which includes depreciation-adjusted saving of households, businesses and the government sector, fell to 1.4 per cent of national income.. Lacking in domestic saving, and wanting to invest and grow, the US has taken great advantage of the dollar's role as the world's primary reserve currency and drawn heavily on surplus savings from abroad to square the circle.. Monthly Treasury Department data show that the crisis-related expansion of the federal deficit has far outstripped the fear-driven surge in personal saving.. But the coming collapse in saving points to a sharp widening of the current-account deficit.. Protectionist trade policies, withdrawal from the architectural pillars of globalisation such as the Paris Agreement on Climate, Trans-Pacific Partnership, World Health Organisation and traditional Atlantic alliances, gross mismanagement of Covid-19 response,