What’s In Store For The Dollar

Top of Mind at Goldman Sachs

After the US Dollar surged in late March as investors rushed to its safety amid the global onset of the coronacrisis, its value has since declined sharply. As uncertainty about the virus trajectory and the global economic recovery continues to loom large, the key question from here is whether this retrenchment marks the start of a multi-year Dollar down cycle, and, even more fundamentally, an erosion of the Dollar’s dominance in the global monetary system.

In this episode, host Allison Nathan interviews three experts to answer these questions: UC Berkeley’s Barry Eichengreen, Cornell’s Eswar Prasad and Goldman Sachs’ own Zach Pandl. They don’t necessarily agree on the direction of the Dollar ahead, with Eichengreen less convinced than Pandl that the Dollar is set for a period of sustained depreciation. But they do agree that despite economic and geopolitical trends that suggest an eventual erosion of the Dollar’s global role, there’s still a long way to go before potential Dollar substitutes—the Euro, RMB and digital currencies—challenge its dominance.