The US dollar is likely to remain strong against other currencies in the foreseeable future as funds take shelter in the greenback as the global economic recovery remains softer than expected, Citicorp Securities Investment Consulting Inc (花旗投顧) said yesterday.
“We’re positive about US dollars as the US economy remains on track for a recovery, though the pace is mild,” Citicorp Securities vice president Spencer Wang (王進彰) told a media briefing.
The US currency may gain further support from hedging requirements, unease over the end of quantitative easing and emerging economies posting lackluster GDP growth, Wang said.
As of yesterday, the New Taiwan dollar had weakened 3.65 percent this year against its US counterpart, central bank data showed.
About US$80 billion fled the bond market last month alone, faster than the US$41.8 billion that fled at the height of the global financial crisis in October 2008, Wang said, after the US Federal Reserve announced its plans end quantitative easing.
The bullish cycles for emerging markets have probably come to an end, Wang said.
China, which accounts for more than 40 percent of Taiwanese exports, may achieve GDP growth of between 5 percent and 6 percent, given weak corporate earnings, he said.
Few Chinese companies are turning profits because of a focus on growing market share and many have accumulated heavy debt burdens due to the strategy, Wang said, adding that the trend makes their shares unattractive.
The Canadian dollar, which has held steady, may see a significant fall against its US counterpart in the near future, consistent with the Russian ruble, the Australian dollar and the Brazilian real, Wang said.
The CRAB nations may head south rather than sideways, he said.
Citicorp is bearish about gold and raw material prices, though they may stage sporadic rebounds, Wang said, advising investors to cut their holdings during the rebounds.