With the clock ticking in Washington DC and Congress desperately trying to find an agreement on raising the debt ceiling, the greenback is heading towards levels last seen in the fall of 2008, when it reached its lowest point over the past 10 years.
Stack of U.S. hundred-dollar bills
This "dollar malaise" is set to last, Thanos Papasavvas, the head of currency management at Investec Asset Management told CNBC on Wednesday.
"The shorting the dollar is going to be here for a little bit longer… even if they do find a resolution," Papasavvas said. "There are still issues: fiscal issues will not go away; the economy is not just simply going to rebound out of a current structure; the industrial environment is not going to be lifted, and reserve managers are going to be looking for continuing to move away from dollars to other currencies," he added.
This move away from the US dollar is to benefit other currencies such as the Aussie, the Kiwi and the Canadian dollar.
"It's the currencies which have had strong fundamentals," Papasavvas explained, "these are countries which are doing relatively well with a continued expansion of the emerging market growth story, China, and commodities."
However, the movement is held back thanks to the markets' appreciation of the US debt negotiations.
"The markets are pricing in… for a downgrade from the AAA status but not necessarily for a default," Papasavvas said. "I think the markets still believe that there will be a final deal on the wire. Some sort of agreement either temporary reprieve for a few months, maybe six months rather than calling for a default."
