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

The Economic Times - - Finance & Commodities -

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.

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