The expert explained the reasons for the growth of the dollar's profitability
The reasons for the increase in dollar yields were the Fed's high interest rates and rising oil prices, which are fueling inflationary expectations and pushing back the prospect of lower rates. Ilya Rusyaev, a business consultant, told Izvestia about this on March 6.
According to Rusyaev, international investors are increasingly investing not just in the dollar as a currency, but in debt instruments denominated in dollars. According to the expert, rising oil prices, which exceeded $86 per barrel in early March, are fueling inflation expectations, which, in turn, pushes back the prospect of lower rates. As a result, traders have revised forecasts, and the probability of a Fed rate cut in 2026 has decreased significantly, he stressed.
"When U.S. interest rates remain high and treasury yields rise, alternative assets lose their appeal. The investor gets real returns in the most liquid currency in the world, and he does not need to take on the increased risks of emerging markets or commodity volatility," he said.
According to the expert, there is no reason to expect a significant flow of capital from the dollar in the near future. As long as the Fed remains firm and inflationary pressures remain due to rising energy prices, the dollar will continue to withdraw liquidity from global markets.
The only way to reverse the trend is to de—escalate in the Middle East, lower oil prices and return the Fed to active easing, but at the moment these events are unlikely, concluded Rusyaev.
On the same day, Evgeny Kogan, an investment strategist and founder of Bitkogan media, said that the dollar's growth against a basket of currencies has accelerated in recent days. In the face of global uncertainty, investors choose it as a safe haven.
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