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Will the Dollar fall further?
Andrew Wilkinson, analyst at Interactive Brokers, says the US dollar won't likely fall further with investors pricing in interest rate cuts
I’m Lisa Twaronite, with market watch. How will the recently battered dollar fare in 2008? And joining me today is Andrew Wilkinson, senior market analyst with Interactive brokers.
Thanks for having me, Lisa.
Thank you for being here. With the US Federal Reserve poised to cut interest rates further, how far do you think the dollar's gonna fall?
I don't think the dollor's got that much further to fall if at all. There are so many intereste rate cuts already priced into the Euro- dollar strip, that i find it difficult to see that investors can't , can't already discount the prospect of a better economy later on this year for the United States. And that would help out global growth.
To what extent do you think the dollar's fall so far relfects a lack of confidence in the US economy.
There are other fundamental reasons, such as the wild trade and the budget deficits, that have helped drive down the value of the dollar over the last five or six years, and with the strong motor of growth that the US economy provided and particularly over the last couple of years. The two things don't really match, so, i'm not convinced this is a lack of confidence based upon the decline in the housing market, or the explosion of the housing market, so i think, i think they'are looking forward to the dollar's prospects a little brighter.
And do you think the weaker dollar is one of the reasons that US Sovereign wealth funds have been buying stakes in US financial firms so far?
Certainly, i think, the value, the outright value of the dollar makes those investments appealing. But, i think that having fallen by more than 30% a lot of these banking stocks look extremely appealing, particularly to overseas investors, so this is a double whammy forward, and i think this is a great long-term investing relationship for the Sovereign Wealth funds, and it's curious particularly a time when the retail investors and probably a lot of institutional investors on this side of the Atlantic, are throwing in the town, and we are seeing some capitulation in the stock markets.
At what point this year do you think the dollar is going to solidly turn around?
I think January, 2008, is right now, is going to be a point of turnaround, probably for both the stock market, and for the dollar. I think, we've, it's curious to see that the value of the Euro hasn't made a fresh height for this move, given the absolute plummet in the value of the stock indices. So if it's not gonna happen now, it says, certainly doesn't feel like its gonna happen later this year.
All right, thank you very much. Thanks Lisa. Andrew Wilkinson from interactive brokers.
