Emerging markets maven Mobius sees weaker dollar in 2017

PUBLISHED : Thursday, 08 December, 2016, 1:04am
UPDATED : Thursday, 08 December, 2016, 1:04am

Mark Mobius thinks that the US dollar may be going down, not up.

The greenback is set to weaken as the US government under Donald Trump increases spending on defence and infrastructure, Mobius, executive chairman of Templeton Emerging Markets Group, said Wednesday.

A lower-valued currency, coupled with faster US economic growth, will benefit the rest of the world, especially emerging markets, he said.

“Don’t be surprised if the US dollar gets weak, and not stronger,” Mobius said at the Bloomberg Markets Most Influential summit in Abu Dhabi. “If Trump is going to make America industry competitive, he needs a weak dollar.”

The dollar has surged since Trump’s election on speculation his proposals to increase spending and cut taxes will fuel economic growth and prompt the Federal Reserve to boost interest rates.

Hedge funds and other large speculators have boosted bullish dollar wagers to the most since February, according to Commodity Futures Trading Commission data, and Goldman Sachs Group President Gary Cohn has warned the currency’s strength poses a growing threat to US manufacturers.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was little changed on Wednesday. It has retreated 1 percentage point since reaching the highest level in more than a decade late last month.

“Trump’s administration will be beneficial for the rest of the world simply because of the fact that he will focus on the growth of the economy,” Mobius said. “To the extent that he is successful in growing America, he will be good to the rest of the world.”