Japan in the World
The Meaning of a Weak USD
USD nominal effective exchange rate index and gold
futures
COMEX gold futures (central contract month) (left)
-Bloomberg USD nominal effective exchange rate index (right)
$/troy ounce
2200
2000
1800
1600
1400
1200
105
100
95
90
90
85
85
NOMURA
The US dollar grew weaker on an effective basis
following the expansion of monetary easing
during the COVID-19 pandemic. Based on the
large drop in US dollar interest rates, and the
prolongation of such rates, this is proof that
investors are increasing their risk appetites and
shifting their funds from safe dollar-denominated
assets to higher risk assets. The Japanese yen,
with lower interest rates than the dollar, is not
becoming a target of risk-taking investors, so
there is little concern of an accelerated
strengthening of the yen
On the other hand, taking into account the risk of
reduced confidence in currency in the US due to
integration of fiscal and monetary policy, caution
is required regarding the possibility that over the
long term the dollar may grow even weaker out of
anxiety over its status as a key currency
1000
2015
80
80
2016
2017
2018
2019
2020 CY
Source: Bloomberg materials
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