Currency Exposure in a Post-Pandemic World
Alessandro Pedrazzini - February 24, 2021
From a cyclical point of view, the severe levels of economic distress in 2020, as well as the variations in the degree of distress across countries and differences in policy responses, have propelled prices to levels that, given how money and credit conditions are likely to materialize over the coming year, are now discounting a range of unlikely scenarios. From a secular point of view, the re-balancing of economic power between East and West, and between China and the US, has advanced at an accelerated pace as a result of variations in the management of the virus over the past year. As a result, the money and credit flows associated with these economic stimulus policies have generated forward prices that discount the reversal of those secular patterns.