Although Javier Milei insisted on local dollarization, most global investors are opting for other alternatives to the dollar, who lost strength so far this year due to the uncertainty of tariffs and fees.
Although the Argentine government insists with the dollarizationthe US currency suffers a global transformation process. The dollar in the world closed the week with a slight rise driven by positive data of the US labor market, but analysts warn that the green ticket could face sustained bearish pressure due to a phenomenon that gains prominence: the Delarization.
According to Bank of America (Bofa) strategists, investors are adopting a more defensive position and use the dollar to Risk coverageeven while buying American assets. In the last three months, the dollar index has fallen more than 1%, which reflects that the Structural demand for the currency begins to moderate.
“Investors are increasingly focused on the coverage of risk currencies called in USD. This will continue to be a subject for some time according to our expectation that the USD will probably depreciate more from overvalued levels,” said Bofa analysts in a client note.
Reserve managers of the main central banks show a growing bias towards non -traditional coinslike him Australian dollar, the Canadian and even the currencies of BRICS countries (Brazil, Russia, India, China and South Africa). Although the change is gradual, analysts describe this process as a “fork” of reserves that could become Dominant trend In the coming years.
“If the level of interest rates is a dominant factor, currencies such as sterling pound and the Australian dollar could be the beneficiaries in a context of falling rates in the US and the growing concerns about the independence of the Fed,” they added.
Trump Super Dollar Markets
Factors that drive change
The political dynamics in the US. It also adds uncertainty. The Supreme Court will analyze on November 5 the legality of the global tariffs promoted by Donald Trump, who also repeatedly criticized the Federal Reserve for not cutting the rates with greater aggressiveness. The recent request from the Administration to fire the governor of the Fed Lisa Cook is seen as an unprecedented fact which could question the independence of the Central Bank.
This context, added to the expectation of New interest rate cuts by the Fedfeeds the search for diversification in international portfolios and accelerates the partial departure of the dollar as the main reserve currency.
Source: Ambito
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