Pictet Warns of Dollar Depreciation Over Next Decade

A leading private bank has warned investors to reduce their exposure to US Treasuries and the US dollar over the next decade. According to Pictet Wealth Management, tech-driven inflation and high government deficits will erode the value of these assets.

Pictet's head of strategy and macroeconomic research, Frederik Ducrozet, said that investors should be protected against something that governments can print and devalue. He noted that some clients have recently wanted to discuss currency hedging, a topic that has rarely been raised in the past.

The bank projected that the US dollar will continue to depreciate over the next decade, with the exchange rate potentially falling to 5.97 yuan per US$1 and US$1.30 per €1. Currently, the rates stand at 6.74 yuan per US$1 and US$1.16 per €1.

Pictet suggested shifting investments to commodities and equities in emerging markets, as global inflation is expected to remain volatile due to factors such as the AI boom and decarbonisation efforts. Kelvin Tay, Pictet's chief investment officer in Asia, stated that 'structurally higher inflation and government deficits reinforce the clear takeaway: buy assets that governments cannot print.'