Dollars willfind buyers hard to find in 2017
With the USFederal Reserve raising interest rates, and PresidentMario Draghi[王瑞1]of the European Central Bank seemingly unable to escape his addiction toquantitativeeasing policy[王瑞2],many investors are questioning who wants to buy the euro. The answer is simple.The whole world is eager to buy the euro.The problem in 2017 is more likely to be finding anyone
who wants to buy the US dollar.
The Middle
East is a good example of a region of avid[王瑞3]euro buyers. Even with the recent rally in the oil price, most Middle Easterncountries are expected torunsizeable fiscal deficits.The IMF expects Saudi Arabia to run a fiscal deficit of almost 10 per cent ofGDP next year. To fund their budget deficits, the Gulf countries are sellingcentral bank reserves andpools of assetsheld by theirsovereign[王瑞4]wealthfunds.
ImagineSaudi Arabia sells USTreasuries[王瑞5],and uses the dollars it receives to pay its civil servants. Then imagine that aSaudi Arabian civil servant takes their pay and uses the money to buy a BMW carin euros. What is happening? Saudi Arabia is selling dollars and buying euros.It does not matter that there is an asset on one side of the transaction and aBMW on the other side of the transaction — the foreign exchange marketimplication is the same whether it is Bunds or BMWs that are bought.
If theMiddle East buys assets, they like their assets to be made in America (centralbanks buy roughly twice as many US assets as other assets). If the Middle Eastbuys products and services, they like their products and services to be made inEurope (the Middle East buys twice as much from Europe as from the US). Thus ifthe Middle East is selling assets to buy goods, it sells dollars to buy euros.
Of coursethis does not justapply tothe Middle East. The worldis
eager tobuy euros because the world wants European products (in preference toUS products).The relative current account balances of the Euro area and the US alone tell usthat. China, another economy inclined todivest[王瑞6]itself of US assetsoflate[王瑞7],buys more euro area imports than US imports. The same is true of the APEC Asianeconomies as a bloc. Africa’spreferenceforEuro area products incomparison to American is overwhelming. Only Latin America exhibits anyrelative desire to buy “made in America”. The rest of the worldclamours[王瑞8]foreuros toobtain goods and services from their preferred supplier.
So why isthe euro not stronger with all this enthusiastic buying of BMWs and other euroarea goods?
In 2016 theUS basicallypleadedwiththe rest of the world tolend it money. US interest rates are above those of the euro area (euro area interestrates are negative). US bondyield[王瑞9]sare above those of the euro area (many euro area bond yields are negative). USequities have outperformed those of the euro area (by about 15 per cent, andeuro area equity performance is negative this year). The US basically dideverything that it could to persuade investors to buy dollars — and at the endof all of that effort the euro still trades within 4 per cent of where ittraded against the dollar at the start of the year.
Thechallenge for the US is that it needs foreigners to buy dollars every day tostop the dollar from falling. In the first nine months of 2016, foreigners hadto purchase $2.7bn every day. That is more than the daily GDP of theNetherlands.Any day that
foreigners were not inclined to buy $2.7bn, the dollar would weaken.This is important — if foreigners decide that they want to “wait and see” whatDonald Trump’s policies are like before committing to buying more dollars, thenthe dollar will fall. “Wait and see” is not good enough for the US.
The question
is not who wants to buy euros — the whole world wants to buy euros because the
whole world wants to buy euro area products. The US had to offer considerable
financial incentives to persuade foreigners to buy dollars.
[王瑞1]马里奥·德拉吉（意大利语：Mario Draghi）是意大利著名的经济学家、银行家，1947年9月3日出生于意大利罗马市，在美国麻省理工学院获得经济学博士学位，曾担任意大利中央银行行长、全球央行主席等职位。现担任欧洲中央银行行长，任期为2011年11月1日至2019年10月31日。
[王瑞2]QE：量化宽松货币政策(Quantitative Easing Monetary Policy)俗称“印钞禁”，指一国货币当局通过大量印钞，购买国债或企业债券等方式，向市场注入超额资金，旨在降低市场利率，刺激经济增长。该政策通常是往常规货币政策对经济刺激无效的情况下才被货币当局采用，即存在流动性陷阱的情况下实施的非常规的货币政策。
[王瑞3]Avid：贪婪的，急切的
[王瑞4]Sovereign：君主；至高无上的
[王瑞5]Treasury：国库
Treasury Bills、Bonds、和Notes之间的差别是到期的时间。Bill一般来说於一年内到期，note的有效期限从一年到十年不等，而bond的期限可超过十年。
[王瑞6]Divest：剥夺，剥除
[王瑞7]Of late：最近以来
[王瑞8]clamour[clam·our || 'klæmə]
n.吵闹,噪音,骚动,喧嚣(也可以拼作clamor)
n.叫声,喊叫;吵嚷地要求,喧嚷地表明
[王瑞9]yield[jɪːld]
n.生产量,投资收益
v.生产,同意,给予;出产,投降,屈服
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