BCA's Chester Ntonifor says U.S. dollar is 'deeply overvalued'

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BCA Research 1.0
Industry Research Firm
Tony Fortt 8.0

BCA's Chester Ntonifor says U.S. dollar is 'deeply overvalued'

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going into 2026-2027 you're going to get a little bit more adjustment Based on PPP models showing 15-20% overvaluation and historical tendency to depreciate from such levels over 2-3 years. Competitiveness measures also support less competitive dollar.

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Introduces guest Tony Fortt from BCA Research, noting his view that the dollar is 'deeply overvalued' and has weakened significantly.

CNBC Host
Tony Fortt

Models show dollar is 15-20% overvalued on PPP basis. Over the next 2-3 years, dollar tends to depreciate from this level of overvaluation.

Competitiveness measures also show dollar is less competitive compared to other currencies. Depreciation has adjusted some overvaluation, but more adjustment expected going into 2026-2027.
Asks why the dollar is 'no longer reliably defensive' and how that contributes to the conversation.

CNBC Host
Tony Fortt

Dollar did not provide defensiveness during market sell-off earlier in 2025, raising concerns.

It is still the global reserve and safe-haven currency, so stress will bring inflows. The lack of protection during 2025 downturns raised concerns about its defensive nature.
Notes FX volatility and specific moves in yen and Chinese yuan, asking how to think about volatility and these moves.

Mentions Peter Boockvar point about yuan strength signaling policy shift in China.

CNBC Host
Tony Fortt

Against rising volatility, you want to hold some dollars, but regime might be changing for EM currencies like China.

Fundamentals rule: China facing deflation impacts yuan's long-term fair value. Many EM currencies (Mexico, Poland, South American, Asian) offer attractive carry versus the US.

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