US$ overvalued as America nears presidential election

London

THE key question facing global markets and businesses is whether the US dollar will maintain its strength after November's presidential election in the United States.

A PPP (purchasing power parity) analysis that examines currencies on a relative-inflation basis shows that the dollar is acutely overvalued against China's renminbi, the British pound and the euro. Sterling has weakened because of the Brexit political factor but following steep devaluations of Asian currencies, the US has lost its competitive advantage in Asia.