债信下调拟导致中期走弱，短期效果不确定

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US Downgrade Likely to be Mixed Bag for Dollar: Analysts
Published: Sunday, 7 Aug 2011 | 4:25 AM ET Text Size
By: Deepanshu Bagchee and Gauri Bhatia


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Standard and Poor's downgrade of U.S.'s sovereign credit rating will likely lead to further weakening in the greenback over the medium-term, a number of analysts told CNBC over the weekend. But, they warned, the short-term effects are unclear.


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Dubai markets were the first to open since the S&P downgrade, but traders reported no major selloff in the dollar, even though stocks initially dropped 5 percent. Instead, the first major currency moves are likely to come from Asia when Tokyo and Sydney start trading at 9am and 10am local times respectively, 8pm U.S. ET.

All the experts agree that the rating cut was well telegraphed and should not take the markets by surprise. Nonetheless, they are bracing themselves for heightened volatility and a flight to safety.

"The knee-jerk reaction will be a dollar selloff versus the yen and Swiss franc but (dollar) strength versus (emerging market) currencies including Asia, given a risk selloff," Thomas Harr, Head of Asian FX Strategy at Standard Chartered bank said.

The rush to safe havens could also boost the dollar against the Euro [EUR=  1.428  ---  UNCH            ], which has been coming under pressure because of the debt crisis in the Euro zone.

In a note to clients, Westpac bank forex strategist Robert Rennie also forecast strength for the Swiss franc [CHF=  0.7671     0.0022  (+0.29%)           ] and yen [JPY=  78.38  ---  UNCH            ] on Monday. He added that the Australian dollar [AUD=  1.044    -0.0019  (-0.18%)           ] and the New Zealand dollar [NZD=  0.8432     0.0098  (+1.18%)           ] might also gain on a selloff in the greenback but warned that such a rally might be short-lived.

According to Rennie, just as during the global financial crisis in 2008, the greenback could rally because of demand for dollars in the short-term funding markets in the U.S. But for now, there seemed to be ample supply.

"Much will depend on what happens in the funding and basis markets," he wrote. "At the moment, the issue in cross currency basis markets is short end supply not U.S. dollar demand."

Mark Mobius, who manages $50 billion as executive chairman of Templeton Emerging Markets Group also believes the greenback will fail to get a bounce this time around from a flight to safety.

"During the sub prime crisis safety was in U.S. Dollars and U.S. Treasurys," he wrote in an email. "Now that anchor to the global community is deteriorating. During the subprime crisis the USD index was high, now it is low which reflects that changed perception."

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According to Westpac's Rennie, investors should avoid risk and warned the Australian and New Zealand dollars were especially vulnerable.


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"Some have started to argue that these currencies were becoming 'safe havens'," he wrote. "This view is myopic at best, dangerous at worst."

Short-term strength in the dollar versus Asian currencies could be seen as a buying opportunity, say analysts. For example, both Thomas Harr of Standard Chartered and Thio Chin Loo, Senior Currency Strategist at BNP Paribas, expect the greenback to weaken against Asian currencies over the medium-term.

"We expect U.S. bond premiums to increase and/or the U.S. dollar to depreciate to compensate investors for the higher risk of holding U.S. assets," Chin Loo told CNBC. "We continue to favor stronger Asian currencies against the U.S. dollar."

- Yousef Gamal El-Din contributed to this report from Bahrain

© 2011 CNBC.com