Pictet's chief strategist: EMs set to benefit as 'overvalued' dollar falls

US dollar 20% overvalued

The US dollar is 20% overvalued and will begin to depreciate over the next five years, making emerging markets much more attractive for investors, according to Luca Paolini, Pictet Asset Management's chief strategist.

Over the past five years to 15 June the US dollar is up 13% against sterling at $1.42, and 22% higher against the euro at $1.12, but year to date it has already begun depreciating against the euro, trading 3.2% lower. Paolini (pictured) said: "Why is the US dollar so expensive when the economy is growing so badly and there is so much political risk? The dollar is 20% overvalued and typically there is a five-year cycle, so I expect it to return to normal." The chief strategist believes the dollar will begin to depreciate against the euro, creating good conditions for investing in emerg...