The US economy has been hit hard by the coronavirus, with the Federal Reserve resorting to quantitative easing and nearly-zero interest rates to help American companies offset the pandemic’s impact. But the flipside of America’s economic slide is that the stability of the dollar as a global reserve currency is now being called into question.
The American dollar continued its decline this week, with the ICE US Dollar Index, which measures its weight against a basket of six major currencies, fell to 92.635, or by 0.4%, on Friday, and is now trading as its lowest level since July 2018.
With this rate of decline, the index may plummet to as low as 80, leading to a full-fledged crash of the American currency, predicts financial commentator and veteran stockbroker Peter Schiff, who believes that a crash could happen by the end of 2020, “perhaps by election day”.
The decline in economic activity associated with the coronavirus restrictions and rising number of cases across America’s Southern states have been accelerating this decline. Meanwhile, the US Federal Reserve have been pushing for aggressive quantitative easing to support US companies, adding almost $3 trillion to its balance sheet since February through unlimited financial asset purchases, which have now topped $7 trillion.