This archive report was first published on 21 April 2020.
As the world grapples with the economic impact of the coronavirus pandemic, a prominent international investor has sounded the alarm on the US dollar's future prospects.
Speaking on Tuesday, Marc Faber, a Swiss investor, warned that the dollar's current strength is unsustainable, citing the country's growing fiscal deficit and aggressive monetary policies.
“So far the dollar has been very strong against some currencies, up more than 20% this year, against the Brazilian real and Mexican pesos, but if you look at the fiscal deficit of the U.S. and all the money printing, I just can’t believe that it will continue to be strong,” Faber said.
While the dollar may hold its ground for a short period, Faber believes that the long-term consequences of the US government's actions will ultimately lead to a decline in the currency's value.
“The U.S. monetary policies are dangerous and negative for the currency,” he added.
With emerging markets yet to fully recover from the crisis, Faber sees a window of opportunity for investors to make gains in the next two to three months, including in Turkey.
However, the pandemic's economic impact will be far-reaching, with Faber predicting that interventions by governments will have serious effects on Western economies.
“Western economies already faced serious problems before the virus hit, and now with the coronavirus crisis things will get worse,” he said.
As the global economy undergoes a drastic transformation, Faber believes that some businesses will struggle to adapt, leading to bankruptcies and defaults.
“A lot of businesses won’t be opening, a lot of people will go bankrupt and companies will default,” he predicted.
With airline revenues plummeting by 95%, Faber expects that the industry will take time to recover, and even then, it may not return to its previous levels.
“People’s behavior will change,” he said, predicting that some individuals will opt for video conferencing over face-to-face interactions.
As a result, Faber believes that some big retailers will never be able to reopen their doors again, while platforms like Amazon, Netflix, and Zoom will emerge as winners.
