The anticipated distribution of a coronavirus vaccine, coupled with additional monetary easing could spell big trouble for the US dollar come next year.
According to a Citibank research note, the US dollar could decline by as much as 20% in 2021 in the event of a successful mass vaccine distribution and further government stimulus measures. The latest Citibank forecast comes amid US-based Moderna announcing a 94.5% success rate of its COVID-19 experimental vaccine, and rival US-based Pfizer announcing a 90% efficacy rate for its vaccine.
German biotechnology company BioNTech has also created a coronavirus vaccine that appears to have a 90% success rate, while developers of Russia’s Sputnik V vaccine have also reported a 92% efficacy.
The US bank noted that the potential for the dollar crash is also dependent on the Federal Reserve’s ongoing economic support. If the central bank continues to utilize its wide array of financial tools to uphold the economy in 2021, in addition to keeping interest rates low even if inflation expectations rise, then the US yield curve could potentially steepen as well.
Information for this briefing was found via Citibank. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.