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[이데일리 최정희 이윤화 기자] The dollar maintains a close balance between good and bad.
President Joe Biden was inaugurated to endure the fiscal deficit and pour out money to overcome Corona 19. Moreover, despite the fact that the’Blue Wave’, where the Democratic Party dominates the Senate and the House of Representatives, has become a reality, the outlook for a weak dollar is losing strength, while the voices of bulls are growing. Until the end of last year, Blue Wave was a factor that stimulated the weakening of the dollar, reading as a negative real interest rate and widening fiscal deficit due to aggressive economic stimulus.
However, despite the fact that Blue Wave has become a reality, the dollar remains as if nothing happened. Expectations of inflation raised the US 10-year Treasury bond rate above 1%, stimulating the strong dollar. It is observed that the dollar may be stronger than expected in that the price of this year is weighed on the rise of inflation even if the base effect alone is considered.
The sluggish consumption, which hindered the US economy, increases the number of vaccinations, and the outlook that the bidennomics will recover if bidennomics begins in earnest is fueling the strong dollar outlook.
In addition, a fall in the dollar may not lead to a strong won. The direction of the won could be more influenced by the biden administration’s public policy. It is predicted that the Biden administration will not only succeed the former Trump administration’s beating China, but also mobilize allies to raise the level of pressure. If the yuan weakens, it is difficult to avoid the weakening of the won, a bundle.
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Biden and Yellen who want to release money… A forecast of a weak dollar
The bearish theory still prevails. According to Reuters, net selling positions in dollars such as hedge funds were $34 billion on January 12 (a week ending on the 12th), the highest since May 2011.
When President Biden takes office, it is expected that the dollar will weaken due to the release of money to boost the economy. In fact, President Biden offered a $1.9 trillion stimulus package, and the nominee of Treasury Secretary Janet Yellen also referred to a “big stimulus package”.
The problem is that the trend of’economic stimulus → fiscal deficit, negative real interest rate → weak dollar’ has already been sufficiently reflected in the market. This year, Blue Wave rather stimulated’expected inflation rise → 10-year Treasury bond yield → strong dollar’.
The expected 10-year inflation rate rose from 1.99% at the end of last year to 2.09% on the 22nd of this month (local time), and the 10-year US Treasury bond rate rose from 0.93% to 1.09% over the same period. The dollar index also rose from 89.93 to 90.24 in the same period.
If the interest rate is similar to that of a red skirt, then US government bonds are more attractive. This trend warns that the dollar’s bearish path may not be as solid as expected.
Ryu Eun-kyung, manager of the Busan Bank’s Fund Management Department, said, “The dollar is weak because we loosen a lot of money, but this is an issue that has already been reflected.” “This will not move the exchange rate easily.”
Opinions are divided on when the dollar will become weaker or stronger depending on inflation and economic recovery paths.
Kim Hyo-jin, a researcher at KB Securities, said, “With negative oil prices (April last year), there is a possibility that inflation will rise due to a base effect until the beginning of the second quarter this year.” did. “But after that, as inflation slows, so does the rise in interest rates and the dollar will weaken again.”
On the other hand, there is a prospect that the US economic stimulus and vaccine supply will stimulate the US economic recovery in the second half of the year and the dollar will turn stronger. Samsung Futures researcher Jeon Seung-ji said, “In the early period of the regime, the dollar will weaken in the short term.”
How will US-China relations be established?
The direction of the won-dollar exchange rate depends on the public policy, not the biden administration’s fiscal policy. The biden administration is expected to continue beating China. However, the difference with the Trump administration is that the method will be more diversified than in the past, and methods to join allies will be mobilized.
Finance Minister Janet Yellen said at a recent Senate approval hearing that “we are ready to take all measures to counter China’s unfair and illegal activities.” On the 22nd, although the dollar was weak against major currencies such as the euro, the yuan and won were strong.
In particular, in Korea, there is an experience in which shrimp lanterns broke out in the whale fight in 2019. In 2019, when the US-China dispute intensified, the won-dollar exchange rate rose by 3.65%, while China’s dollar-yuan exchange rate rose only 1.24%. The attack was actually in China, where the fall of the won against the dollar was greater than that of the yuan.
This is because the dependence on China for exports, the backbone of the Korean economy, is so high.
According to the Financial Times (FT), economists’ forecasts for the renminbi against the dollar this year are broad, ranging from a 7.2% decline (YoY) to a 6.6% increase. It is an opinion that there is a lot of uncertainty.
Young-jin Ahn, a researcher at SK Securities, said, “Bidendo protectionism is the same as Trump. It is just the difference between extreme and less extreme,” he said. “The factors that caused the weakening of the dollar last year will turn into a strong dollar, and a turnaround is expected as the first quarter passes.”
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