Dollar index level can weaken to 95-96 in coming months: IFA Global

There is an 87 percent probability of a 25 basis-point rate hike by the US Federal Reserve. Abhishek Goenka, Founder, and CEO of IFA Global, believes that despite the potential rate hike, the recent economic data from the US has been disappointing, which has been dragging the dollar down. Goenka expects the US dollar to weaken to 95-96 in the coming months.

Goenka said, “Our models have been showing weakness in the US dollar during the last four or five months and I think we maintain that because as I said, we are in the last leg of the rate hike cycle. And with the deteriorating, numbers coming in the US, the expectations of recession at the same time, the entire mess happening in the banking sector, I think the US dollar is poised to weaken.”

“On a medium term we feel the dollar index to weaken 95-96 could possibly happen maybe in the next six to eight months,” he added.

This decline in the dollar has been providing some cushion to the equity markets. Goenka also noted that India might be closer to the end of its rate hiking cycle.

However, he mentioned that the rupee is stabilising at around 82 levels against the dollar, and he expects the Indian currency to strengthen towards 81 odd levels as the current account looks far better now.

In terms of precious metals, Goenka advised investors to remain buyers on dips, as gold and silver are well placed at the current reckoning. He also highlighted the fact that the recent decline in the dollar has been supporting the precious metals.

Goenka said, “Gold is a very good asset class in the current environment. We have been pushing towards, and we maintain that gold and silver, both would be good asset classes for 2023 it is a buy on any dip.”