The bank said in a research note published on Thursday that the dollar could fall as much as 20 percent next year mainly as a result of the a large-scale program to distribute COVID-19 vaccines in the US.
The bank said vaccine roll-out could intensify the negative impacts of ongoing monetary easing policies of the US government.
“When viable, widely distributed vaccines hit the market, we believe that this will catalyze the next leg lower[ing] in the structural USD downtrend we expect ... Given this set-up, there is the potential for the dollar’s losses to be front-loaded, with the USD potentially falling by as much as 20 percent in 2021,” said the bank in its note.
American pharmaceutical companies, including Pfizer and Moderna, have announced that their anti-coronavirus vaccines have proven more than 90 percent effective in clinical trials.
That has raised hopes for the United States as the worst-hit country in the world by the virus as Washington struggles to contain surging infection rates and let the economy fully reopen after months of closures and extensive restrictions.