USD under pressure with foreign investors' diminishing demand for US-denominated assets ...Middle East

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USD under pressure with foreign investors diminishing demand for US-denominated assets

The US dollar is under pressure as foreign investors show diminishing demand for dollar-denominated assets, according to Deutsche Bank analysts.

Using the bank’s ETF flow data:

    foreigners “are no longer buying enough dollar assets to finance America’s huge current account deficit.”

    DB highlights recent data showing the U.S. net international investment position (NIIP) narrowed slightly in the first quarter to -$24.61 trillion, compared to -$26.54 trillion in the fourth quarter. This shift reflects weaker performance in US assets and ongoing dollar depreciation.

    To return to historical norms in the ratio between GDP and NIIP, DB estimates that the dollar would need to weaken by 30% to 35% from current levels ... which “highlight just how extreme the current U.S. flow problem is.”

    This article was written by Eamonn Sheridan at www.forexlive.com.

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