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© Reuters.
By Carjuan Cruz
Investing.com – The strength of the dollar is here to stay longer, at least that’s what several recent reports point to that talk about how the US currency has gained over the last six months and, far from estimating that it is a movement that has already reached the top, they estimate that the index could still rise more.
A recent analysis by the investment bank Goldman Sachs (NYSE:) indicates that the dollar could remain strong for longer: “The strength of the dollar could be more persistent despite a challenging valuation picture,” the entity indicated in its report.
This investment bank also pointed out that the market could be “underestimating” this possibility, and highlighted 3 reasons why it is inclined to this scenario:
1. For this investment bank, inflation in the United States is still high and difficult to control. Which implies that there is still time left for the Federal Reserve’s hard-line policy, a pace that makes it difficult for them to match the other central banks of the world.
2. The “challenging” fiscal environment and the “missteps” that can occur, as in the current case of the United Kingdom, undoubtedly add strength to the dollar. Only the announcement of a new tax plan hit the pound and debt bonds hard.
3. And thirdly, concerns about global financial stability are significantly driving investors’ interest in the dollar as a safe haven, causing demand to skyrocket at a time of tight liquidity.
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