The US dollar weakness reflects growing pessimism over the US economy and the stress financial markets are under. This has sparked fears of poor stock market performance and lower returns on dollar assets, says CIMB Economic Research.
The US dollar is heading for a precipitous fall against the major currencies, namely the yen and the euro. Since 2002, the dollar has fallen 23.6% in nominal terms and 21.4% in real terms, if measured against a broad basket of US trade-weighted currencies. On a bilateral exchange rate basis, the dollar has lost ground against the major currencies such as the yen (8.9% so far this year) and the euro (7.6%).
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