AllianceBernstein and UBS say Brazilian currency is one of the main beneficiaries of dollar’s decline

The dollar has defied predictions of a prolonged downturn since at least the start of the year.

Now, however, top managers say the U.S. currency’s rally is in its final days.

The weakening of the dollar is attributed to the approach of peak interest rates in the United States and the impact of the Federal Reserve’s aggressive tightening on the world’s largest economy, according to investors.

AllianceBernstein and UBS Asset Management anticipate that as the dollar weakens, currencies such as the yen, the New Zealand dollar, the Brazilian real, and the Colombian peso may strengthen.

This belief is supported by the expectation of a slowdown in the U.S. economy and potential easing by the Federal Reserve.

Recent data showing cooling U.S. inflation has strengthened the case against the dollar, leading to a decrease in the Bloomberg Dollar Spot Index.

Hedge funds have become net sellers of dollars, and investors are now considering alternative currencies that may benefit from the dollar’s decline.

While some market participants express confidence in a weaker dollar, others remain uncertain.

Concerns over global growth and the relative strength of the U.S. economy compared to Europe and China contribute to their skepticism.

Additionally, arguments for a stronger dollar include the potential for higher interest rates if inflation remains elevated and the currency’s historical resilience during risk-averse periods.

Overall, there is a growing consensus that the dollar’s recent strength may wane, but opinions remain divided regarding the extent of its potential decline.

With information from Bloomberg

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