Citigroup strategists: the dollar remains the only safe haven for investors
Until the end of the year, the US currency, despite the overvaluation, will remain the only asset that allows you to hedge the risks of a drawdown in the portfolios of international investors, macrostrategists at Citigroup Inc (NYSE:C) believe.
Global stock markets have lost $23 trillion since the beginning of 2022, with the value of bonds also falling, and only the dollar continues to show a consistently negative correlation with risky assets, Bloomberg quotes experts.
“In a world where central banks are aggressively raising rates (bad for fixed income) to tighten financial conditions (bad for equities), the only place to hide is the US currency,” wrote Citi strategists led by Jamie Fahey and Adam Pickett: The dollar is a currency that can act as a hedge against asset downside risks.
Analysts estimate the dollar index will hit 111.98 over the next three months, up about 2.1% from its current level and hitting a new 20-year high.
At the same time, in 2023 the situation may change, and the growth of the dollar will stop, experts believe.
“We have repeated time and time again that the end of the bullish trend in the dollar will come either if the Fed raises rates to highs and then declines, or if global growth expectations fall. This could happen in 2023, but not today,” the bank said in a statement.