The deputy chief investment officer (CIO) at the asset manager DoubleLine Capital says his firm predicts that the US dollar will trade down in the short to medium term.
Jeffrey Sherman notes in a new interview with CNBC that capital flight is one of the main reasons for their prediction.
“If you look at measures of purchasing power parity and thinking about the dollar, and on a trade-weighted basket, the dollar has been overvalued for many years now.”
Sherman also argues that the Trump Administration and Treasury Secretary Scott Bessent want a weaker dollar this cycle “because it helps absorb some of these policies.”
Additionally, the deputy CIO says gold is looking strong, noting that DoubleLine has continued to recommend gold allocation for its clients.
“We have noticed that gold continues to ratchet up, it ratchets up in every currency and you’ve noticed central banks around the world continue to have very strong demand for that. So that also augurs for a weaker dollar as well.”
The U.S. Dollar Index (DXY) has lost nearly 0.5% of its value in the past 30 days, nearly 5% in the past three months and almost 9% year to date.
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