World’s biggest money manager is shorting the US dollar against yuan, rupee, rupiah, regardless who the Oval Office occupant is

The world’s biggest money manager is shorting the dollar on expectations that unprecedented fiscal and monetary stimulus will prolong its losses – regardless of who wins the US election.

BlackRock holds a “modest” short in the US dollar against the likes of the Chinese yuan, Indian rupee and Indonesia rupiah, said Neeraj Seth, head of Asian credit in Singapore. The three Asian nations are among those best positioned to benefit from a weakening dollar as investors seek out higher-yielding assets and growth.

“My base case is that we still have at least one- to three years of more moderate dollar weakness on the cards – that’s not going to change,” Seth said in a phone interview on Thursday. “Regardless of the election outcome, some of the policy actions have already happened.”

The US$7.3 trillion giant joins global peers including Goldman Sachs and UBS Asset Management that favour selling the dollar with just a week to election day. On Monday, BlackRock strategists downgraded their views on Treasuries on growing likelihood of significant fiscal expansion under a unified Democratic government.

A Bloomberg gauge of the dollar has fallen over 1 per cent this month as Joe Biden extended his lead in polls over President Donald Trump. The yuan has risen 1.3 per cent against the dollar, Indonesia’s rupiah has gained 1.6 per cent while India’s rupee is little changed.

The downtrend in the US dollar may see a “temporary pause” depending on the election outcome, but its weakness is likely entrenched over the long term, said Seth.