January 21, 2022

Dollar higher again, what to expect?

The US dollar is trading at R $ 5.16, after a slight downturn in recent days, with the currency being quoted close to R $ 5 reais. Despite the fact that the dollar stood out against peripheral currencies in 2020, analysts say that many investors are betting against the US currency at the moment.
A new survey by Bank of America revealed that the bet against the dollar is being one of the most taken positions by fund managers. Shares of technology and bitcoin companies have benefited from this cash flow.
Two factors are being pointed out as the cause for this change of position on the part of investors: the trillion dollar stimulus packages and the result of the elections.

Trillions and trillions

The year 2020 is certainly a milestone for the world monetary economy, never before has there been so much money on this scale being printed, and the consequences of this may already be being felt now.Coinext 760x150

Considering all units of the US dollar since the beginning of the currency's history, this year alone, 22% of the entire currency supply was created.
M1 money stock – Total dollars in circulation. Source: FRED.
After recent rumors of yet another $ 1.4 trillion economic stimulus package, the dollar (DXY) index fell last week to 86.95, its lowest level since April 2018.

Elections

After the controversial fraud charges involving the American elections, Joe Biden was elected president of the United States. However, the Republican party again managed to win a majority in the Senate, hampering the governability of the Democratic leader.
In this type of scenario, only the guidelines agreed by both parties tend to pass easily through the Legislative Chamber and, among them, is the increase in spending, which tends to depreciate the value of the currency.

The big bet

In this scenario, where the world value currency is at risk of losing its status, Bitcoin gains a prominent role alongside gold, an old acquaintance of the world economic crises. Many institutional investors and large corporations have been taking an optimistic view of cryptocurrency.
MicroStrategy's investments have opened the door to a giant capital flow and, if Bitcoin does take the dollar's place in the world economy, the asset's price is expected to rise exponentially due to its scarcity.
Read more: PicPay extends yield of 210% of CDI, see how to benefit


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