from fxstreet.com

Yale’s Stephen Roach calls a 35% drop in the US dollar

Yale University’s senior fellow Stephen Roach, one of the world’s leading authorities on Asia, expects the US dollar to decline by 35% against other major currencies due to ballooning fiscal deficits.

“The U.S. economy has been afflicted with some significant macro imbalances for a long time, namely a very low domestic savings rate and a chronic current account deficit,” Roach told CNBC’s Trading Nation on Monday and added that “the dollar is going to fall very, very sharply.”

Dollar crash may happen over the next year or two, maybe more. The crash is inevitable.

Generally, it’s [dollar crash] a negative implication for U.S. financial assets. It points to the probability of higher inflation as we import more higher-cost foreign goods from overseas, and that’s a negative for interest rates.

Problems are going from bad to worse as we blow out the fiscal deficit in the years ahead.

The national savings rate is probably going to go deeper into negative territory than it has ever done for the United States or any leading economy in economic history.