Investors Accelerate American Greenback Liquidation: Report
TEHRAN (Tasnim) – Investors are selling US dollar positions at the fastest rate in a year as they expect lower rates next year after the US Federal Reserve ends its aggressive campaign of interest-rate hikes.
Asset managers are poised to sell 1.6% of their open dollar positions this month, in the largest monthly outflow since last November, Financial Times reported, citing State Street, one of the world’s largest asset management companies.
The bank said investors have made “significant” sales daily since weaker-than-expected US jobs data was released on November 3.
“Flows in the past two weeks point to a rapid rethink with dollar demand,” Head of Macro Strategy at State Street Michael Metcalfe said, RT reported.
He added that recent greenback sales marked the unraveling of “an unusually large US (dollar) overweight” position.
“Investors think ‘if (rate cuts are) actually going to be delivered, then I don't need to hold as many dollars.’”
Month of November marked the worst monthly performance of the American currency in a year, with experts predicting that “sales by asset managers could just be the start of a longer-term trend among investors to reduce exposure to US assets.”
Weakness of the greenback plays into the hands of emerging markets as it helps them repay dollar-denominated loans and could prompt investors to flow back to developing economies after heavy sales of hard-currency debt this year, the report added.
