US dollar is now on a long-term downward path: Jefferies
The report highlighted that on 24 December last year, America reached an all-time high of 67.2 per cent share in the MSCI All Country World Index. This was during a time of strong optimism and talk about "American exceptionalism."
Jefferies noted that this level was already close to breaking out on the charts, and now the breakout has finally happened.
However, the report clarified that this does not mean the US stock market will collapse. The issue is that the US holding 67 per cent of the index is unusually high.
This is especially significant because the US accounts for only 26.4 per cent of the global economy in terms of nominal GDP in US dollar terms and just 14.9 per cent based on purchasing power parity (PPP).
Even when taking into account the large global presence of American tech companies, the number still seems inflated. This large gap suggests that the US dollar is now on a long-term downward path.
Jefferies said "There are several reasons to bet on a weaker dollar. One not unimportant one is that Donald Trump himself wants a weaker dollar".
One reason to expect a weaker dollar, according to Jefferies, is that US President Donald Trump. The report stated that his unpredictable style of governance and frequent policy changes, especially on tariffs, create uncertainty in the market.
This kind of unpredictability can result in a natural discount on the dollar's value.
But the biggest reason, the report mentioned, is the worsening financial condition of the US after the Covid pandemic. The Federal Reserve's generous policies have added to this problem.
The result could be a rise in financial repression, possibly leading to yield curve control and even exchange controls in the future.
This growing gap in savings and the US's increasing debt levels are strong signs that the dollar may continue to weaken in the long run.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Observer
4 hours ago
- Observer
India reels from US tariff hike threat
Mumbai - Indian exporters are scrambling for options to mitigate the fallout of US President Donald Trump's threatened tariff salvo against the world's most populous nation. Many warn of dire job losses after Trump said he would double new import tariffs from 25 percent to 50 percent if India continues to buy Russian oil, in a bid to strip Moscow of revenue for its military offensive in Ukraine. "At a 50 percent tariff, no product from India can stand any competitive edge," said economist Garima Kapoor from Elara Securities. India, one of the world's largest crude oil importers, has until August 27 to find alternatives to replace around a third of its current oil supply from abroad. While New Delhi is not a major export powerhouse, it shipped goods worth approximately $87 billion to the United States in 2024. That 50 percent levy now threatens to upend low-margin, labour-intensive industries ranging from gems and jewellery to textiles and seafood. The Global Trade Research Initiative estimates a potential 60 percent drop in US sales in 2025 in sectors such as the garment industry. Exporters say they are racing to fulfil orders before the deadline. "Whatever we can ship before August 27, we are shipping," said Vijay Kumar Agarwal, chairman of Creative Group. The Mumbai-based textile and garment exporter has a nearly 80 percent exposure to the US market. But Agarwal warned that it is merely triage. Shipping goods before the deadline "doesn't solve" the problem, he said. "If it doesn't get resolved, there will be chaos," he said, adding that he's worried for the future of his 15,000 to 16,000 employees. "It is a very gloomy situation... it will be an immense loss of business." - Shifting production abroad - Talks to resolve the matter hinge on geopolitics, far from the reach of business. Trump is set to meet Vladimir Putin on Friday, the first face-to-face meeting between the two countries' presidents since Russia launched its full-scale invasion of Ukraine in February 2022. New Delhi, with longstanding ties with Moscow, is in a delicate situation. Since Trump's tariff threats, Prime Minister Narendra Modi has spoken to both Putin and Ukrainian President Volodymyr Zelensky, urging a "peaceful resolution" to the conflict. Meanwhile, the US tariff impact is already being felt in India. Businesses say fresh orders from some US buyers have begun drying up -- threatening millions of dollars in future business and the livelihoods of hundreds of thousands in the world's fifth biggest economy. Among India's biggest apparel makers with global manufacturing operations, some are looking to move their US orders elsewhere. Top exporter Pearl Global Industries has told Indian media that some of its US customers asked that orders be produced in lower-duty countries such as Vietnam or Bangladesh, where the company also has manufacturing facilities. Major apparel maker Gokaldas Exports told Bloomberg it may boost production in Ethiopia and Kenya, which have a 10 percent tariff. Moody's recently warned that for India, the "much wider tariff gap" may "even reverse some of the gains made in recent years in attracting related investments". India's gems and jewellery industry exported goods worth more than $10 billion last year and employs hundreds of thousands of people. "Nothing is happening now, everything is at a standstill, new orders have been put on hold," Ajesh Mehta from D. Navinchandra Exports told AFP. "We expect up to 150,000 to 200,000 workers to be impacted." Gems and other expensive non-essential items are vulnerable. "A 10 percent tariff was absorbable -- 25 percent is not, let alone this 50 percent," Mehta added. "At the end of the day, we deal in luxury products. When the cost goes up beyond a point, customers will cut back." Seafood exporters, who have been told by some US buyers to hold shipments, are hoping for new customers. "We are looking to diversify our markets," says Alex Ninan, who is a partner at the Baby Marine Group. "The United States is out right now. We will have to push our products to alternative markets, such as China, Japan... Russia is another market we are looking into." Ninan, however, warns that it is far from simple. "You can't create a market all of a sudden," he said.
Times of Oman
4 hours ago
- Times of Oman
India's top 300 family businesses control a combined $1.6 trillion: Report
New Delhi: Barclays Private Clients and Hurun India have released the second edition of the '2025 Barclays Private Clients Hurun India Most Valuable Family Businesses List', revealing that India's top 300 family businesses control a combined Rs. 134 lakh crore (USD 1.6 trillion) in value, surpassing the GDP of Turkey and Finland. The Ambani family retains the top spot for the second consecutive year, with a valuation of Rs. 28.2 lakh crore, roughly a twelfth of India's GDP. Following closely, the Kumar Mangalam Birla family climbed one place to second with Rs. 6.5 lakh crore, while the Jindal family entered the top three for the first time with Rs. 5.7 lakh crore. Together, these three account for USD 471 billion (Rs. 40.4 lakh crore), a figure equivalent to the GDP of the Philippines. The report notes that 100 new families entered the rankings this year, expanding the list to 300. These businesses generated an average of Rs. 7,100 crore every day in the past year, contributed Rs. 1.8 lakh crore in taxes, 15 per cent of India's corporate tax collections, and employed over 2 million people, more than the population of Bahrain. In the first-generation business category, the Adani family leads again with Rs. 14 lakh crore, followed by the Poonawalla family of Serum Institute fame at Rs. 2.3 lakh crore. Anil Agarwal's family broke into the top 10 with Rs. 2.6 lakh crore, as the entry threshold for the top 10 rose to Rs. 2.2 lakh crore. The study highlights a surge in billion-dollar family enterprises, with 161 families now valued above USD 1 billion, up 37 from last year. Haldiram's family remains the most valuable unlisted company for the second year at Rs. 85,800 crore. Notably, 22 family businesses on the list are led by women, while 62 have professional CEOs. Mumbai dominates as the city with the most listed families (91), followed by the NCR (62) and Kolkata (25). Industrial products lead in numbers with 48 companies, but automobiles and auto components boast the highest average valuation at Rs. 52,320 crore. The oldest business on the list belongs to the Wadia family, valued at Rs. 1.58 lakh crore, while 93-year-old Kanaiyalal Maneklal Sheth of Great Eastern Shipping stands out as the oldest active leader, steering a company worth Rs. 14,000 crore.
Times of Oman
4 hours ago
- Times of Oman
Global economy in major problem if Russian oil exports disrupt, India's impact limited to $5bn annually: Report
New Delhi: If Russian oil exports were to be disrupted, it could create a major problem for the global economy, however, for India, the impact is expected to be limited, according to a report by Bank of Baroda. The report stated that according to estimates, the effect on India's oil import bill would be around USD 5 billion annually, an amount considered manageable given the country's overall trade size. It stated, "For the world economy there could be a greater problem if there is a full embargo on Russian oil exports". The report mentioned that India's crude oil sourcing pattern has changed significantly in recent years. Before the Ukraine war in 2021-22, Russia's share in India's crude oil imports was modest. By 2024-25, however, Russia emerged as the largest supplier, followed by Iraq with a 19 per cent share, Saudi Arabia with 14 per cent, and the UAE with nearly 10 per cent. Together, these four countries accounted for almost 80 per cent of India's oil imports in 2024-25. The United States' share, which had been high in the past, fluctuated and stood at a lower level in recent years. In terms of prices, there is considerable variation among suppliers due to factors such as logistics, quality, and purchase timing. In 2024-25, Iraq offered the lowest average price at USD 76.83 per barrel, followed closely by Russia at USD 78.39 per barrel, about USD 1.56 lower than India's overall average price. The June 2025 data showed the average import price for India at around USD 69 per barrel, with Russia, Iraq, Kuwait, Nigeria, and Brazil offering prices below USD 70 per barrel. Interestingly, Russian oil was not the cheapest that month, as Kuwait and Iraq sold at lower rates. India imported around 244 million tonnes of crude oil in 2024-25, roughly 1.8 billion barrels. Every USD 1 increase in oil prices translates to about USD 1.8 billion in additional import costs. Given that June's average price was only USD 2.50 above Russian levels, the report highlighted that the potential impact would be absorbable. It stated, "The overall impact hence would not be more than USD 4.5-5 bn on an annual basis. Given that overall imports of goods were USD 720 bn, this would not be a significant increase which cannot be absorbed". Globally, the stakes are higher. Russia accounts for about 10 per cent of global oil supply, and a complete embargo could push prices above USD 80 per barrel in the short term which as per report will strain economies worldwide until alternative supplies are arranged.
