According to Pacific Investment Management Co. (Pimco), the dollar’s decline has only begun, “with room for the world’s reserve currency to weaken against emerging markets,” reports a recent Bloomberg article.

The article notes that the dollar has come under “increasing pressure as the Trump administration struggles to reign in the pandemic and the Federal Reserve pledged unlimited liquidity to support a battered economy.”

Stephan Chang, a Pimco portfolio manager in Hong Kong, is quoted: “An important factor to watch is whether a phase four fiscal stimulus package will be passed in the U.S., as otherwise the discontinuity of fiscal support will lead to a significant risk-off and USD bullish event.” He notes that while most developed nations’ currencies have benefited from a weaker dollar, Asian currencies have lagged, adding that a “cyclical recovery in Asia, particularly in Korea and China, which have handled the public health situation competently, should allow these currencies to outperform.” Pimco reportedly favors Malaysian and Chinese government bonds on expectations that those nations’ central banks may persist in reducing rates to revive their economies.

Kim Yumi, a market strategist at Kiwoom Securities in Seoul, weighed in: “Low real rates would weaken the dollar. Asia will generally benefit from dollar weakness with gains in the yuan, Taiwan dollar and won standing out.”