Persistence pays off for BNP Paribas

The French bank’s bearish dollar forecast was based on a fundamental factor: the bank felt the market was underestimating the negative impact a liquidity withdrawal would have on the US economy.

“The US credit crunch led liquidity to dwindle, suggesting the Fed will ease US interest rates further,” said Ian Stannard, senior currency strategist at BNP Paribas in London.

“This expectation of rates being eased has removed the USD’s interest rate advantage as a currency. This is exemplified by the

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