Dollar Heads for Worst Start to a Year in Over a Decade
Dollar fell 1% this week against yen after Trump’s ban on travellers
New York: The dollar was on course for its worst start to a year in more than a decade on Tuesday after a trade adviser to President Donald Trump added to signs the new administration may be trying to talk its currency down. Suggestions by the head of Trump’s new National Trade Council, Peter Navarro, that Germany was benefiting from a “grossly undervalued” exchange rate drove the euro 0.6% higher and sparked a broader fall in the dollar. Already down 1% this week against the yen after Trump’s ordering of a ban on travellers from seven mainly Muslim states spurred protests worldwide and across the US, the dollar fell another half percent in the European morning.
“I don’t think this is a dollar debasement policy,” said Stephen Gallo, head of European FX strategy with Bank of Montreal. “But they are trying to go into talks (on trade deals) with a strong hand which says: you guys have been debasing your currencies, we think you owe us something.”
By 1230 GMT, the dollar traded 0.5% weaker on the day at 113.23 yen. It was down 0.6% at $1.0758 per euro. That all put it on course for a fall of 2.1% on the month against a basket of currencies. Gallo expects the dollar to benefit from a push to encourage repatriation of corporate capital to the US.