Not US Dollars, This is a Jumbo Currency When Tapering

Jakarta, CNBC Indonesia – The United States (US) dollar has been in a slump lately. In 11 trading days, the US dollar index has weakened 10 times, and is at a one-month low.

Outlook for the short to medium term is also still confusing for market participants. In the world of foreign currency trading (foreign exchange/Forex), holding the US dollar is now certainly at greater risk.

So far this year, the US dollar index still posted a gain of around 3%. However, the latest survey results from Reuters show the majority of analysts see the gains will be trimmed in the rest of the year, and outlook the short and medium term is increasingly uncertain. The survey was conducted from August 30 to September 2 last, nearly 60 currency analysts said it.

“There are two important factors that determine the direction of the US dollar. The first is the global economic recovery and the momentum we’ve seen recently, and the second is definitely the central bank’s response,” said Kerry Craig, an analyst at JP Morgan Asset Management in Melbourne, as reported by Reuters. Reuters, Friday (3/9/2021).

For now, only the US central bank (The Fed) is preparing to respond to the global economic recovery, and in particular the US economy. The Fed, has opened a discourse on tapering or reducing the value of the asset purchase program (quantitative easing/QE). The move that was expected to make the US dollar strengthen, but in fact has recently been depressed.

A survey conducted by Reuters also showed that 75% of 51 analysts expected the Fed to announce tapering in the fourth quarter of 2021.

Reuters also said that no consensus had been reached in the next 3 months on where the US dollar would go. As many as 42% expect the US dollar to strengthen, 38% see it will remain at current levels, and 20% see it will weaken.

In addition, in the next 12 months, the US dollar is still predicted to weaken. But this survey also shows how confident the weakness is. As many as 38% are still sure, 48% are not sure, and the rest are not sure at all.

The survey results show that analysts are still confused about where the US dollar will go in the future.

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