Ray Dalio: Currency war could intensify
In the CNBC interview, Dalio said the currency war could intensify around the globe if central banks’ and governments’ monetary policy fails. He said lower exchange rates boost exports’ price competitiveness, benefiting financial markets to an extent. A dovish stance by central banks also encourages citizens to invest in foreign countries. Morgan Stanley has predicted the Fed will gradually move to a zero-interest rate policy. However, as cryptocurrencies gain popularity, central banks’ and governments’ control over money flow could diminish. Bitcoin has risen nearly 164% this year.
In the second quarter, Dalio’s Bridgewater Associates expanded its SPDR Gold Shares ETF (GLD) holdings by 1.3%, the highest increase among its top buys. With the current economic turmoil, the hedge fund could expand its GLD holdings. It has cut down its exposure to the iShares Core MSCI Emerging Markets ETF significantly. However, the fund is bullish on India and Brazil. Around half of India’s population is under the legal working age. In Brazil, this proportion is 43.3%. Developed countries’ shrinking working-age population is one of many reasons for the slowdown.