Khwaja made this known on Thursday during a virtual analysis of the KTrade Securities research report.
He attributed restrictive fiscal policy to have contributed to decline of dollar value in the mid- and long-term in 2023.
“This includes surge in the U.S. fiscal deficit and depletion of surplus savings: the projection indicates slowdown in growth as business investment weaken, ultimately affecting the U.S. economy,” he said.
This, according to him, was because direct and secondary sanctions implemented by the U.S. administration increased the risks of holding assets or raising finance in dollar.
“The use of the U.S. dollar as a tool to print money or control its reputation comes at the risk of the Global South.
“It’s usage to implement sanctions has been the most damaging factor, as 28 per cent of the Gross Domestic Product (GDP) of the world is under sanctions.
“This is big enough for these countries to start thinking about using their own currency,” he added.
He explained that People’s diminishing confidence in prospective decline of USD could go along with hiking gold prices.
On treasury bills, the chairman said the U.S. Treasury’s funding of pandemic-related deficits contributed to the policy mix.
“T-bill issuance has increased by 125per cent since 2019 and reserve balances are up by 118 per cent, and the Fed’s target rate is 125per cent higher than in 2019.
“Therefore, interest payments on T-bills and reserve balances, together, are putting pressure on U.S. economy.
“This will prompt the Fed to ease its stance over monetary policy in the next couple of years”, he quoted the report as saying.
Khwaja further said that due to depreciation of dollar, emerging economies stood to benefit, while financial mechanisms and investments may shift towards longer-term bonds.
He restated the need for cautious market navigation, urging investors to consider alternative avenues and be vigilant of broader economic trends amid decline in dollar value.
