Trump must watch what he says about the US dollar
The greenback is the de facto international currency and what the American leader says about it can rattle economies around the world
Donald Trump has made no secret that he thinks the US dollar is too strong. Several times, the latest last week, he has said that the robustness of the currency is hurting the competitiveness of American exports, an issue that gets to the heart of his pledge to rejuvenate American industries and create jobs. But while such talk may strike a chord with supporters, it is not what those who hold or trade in the greenback want to hear. They expect strength and stability and each utterance negatively affects its value.
The dollar has dropped in value each time Trump has spoken of the need for it to be weaker.
His latest remarks resulted in the dollar index, which compares the US dollar to other major currencies, falling by up to 0.8 per cent and US 10-year bond yields also dipped. There has since been a rebound, but such instability, no matter how short term, is not to the liking of many foreign governments, investors and industries that do business in US dollars. It is precisely because the dollar is strong and stable that it is the de facto international currency.