Expectations that the Federal Reserve would taper its asset-purchase program sent many currencies on a rollercoaster ride this year, and according to analysts, the pain isn’t over yet.
Mitul Kotecha, head of global markets research Asia at Credit Agricole bank, says higher U.S. yields, relative growth outperformance and higher capital flows back into the world’s largest economy will all help boost the greenback in 2014.
“We believe the currency [dollar] will strengthen broadly against a lot of major currencies and a lot of emerging market currencies. The key is which currencies will suffer the most in 2014 on the back of a stronger U.S. dollar,” he told CNBC Asia’s Cash Flow on Monday.
Kotecha singled out the Japanese yen, which has lost nearly 20 percent against the dollar this year and the euro, which has strengthened 3.7 percent against the dollar over the same period, as the major currencies likely to fare worst amid dollar strength.
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