The dollar has grown from strength to strength and dominates international trade with all the major currencies keeping track of their value against the greenback. Commodities such as gold and oil are sold in dollars and there seems no end in sight for the continual dominance of the United States currency in world trade.
The old adage goes: what goes up must come down. The question is whether this also applies to the dollar.
It’s a crucial question that any investor seeking to place funds offshore should consider.
According to Jeremy Gardiner, Investec’s director of asset management, ”there is a growing body of thought that the dollar is one of the bubbles left over from the excess of the Nineties”.
Gardiner reckons that we have seen the stock market and the tech bubbles burst and the dollar is next.
”It’s the last bubble left to burst”.
He points out that interest rates in the US have been cut nine times this year so far and that ”the dollar should not be where it is now”.
”The dollar is very expensive at current levels and looking forward its outlook is uncertain at present.”
Although he admits that it is a brave investor that bets against the dollar, he advises that it’s prudent to diversify into other currencies. The euro has been stable and next year sees the introduction of euro notes and coins.
His offshore recommendation: ”The Swiss franc is a good bet. A lot of investment went into that currency at the end of September: perhaps it is the new safe haven.”