Dollar falls against world currencies due to lack of confidence in US
Photo: The dollar fell against world currencies (Getty Images)
The dollar continues to fall as investor confidence in the world's reserve currency remains in question following a series of tariff-related statements from US President Donald Trump, Reuters reports.
Investors are bracing for another volatile week as Trump's imposition and then sudden postponement of tariffs on goods imported into the US continue to sow confusion.
Against a basket of 6 currencies, the US dollar is holding near a three-year low at 99.77.
The White House granted an exemption from the high tariffs for smartphones, computers, and some other electronic goods imported mainly from China.
Trump later said that this step would be short-lived. He said that he would announce the amount of the duty on imported semiconductors next week, adding that flexibility would be shown to some companies in the sector.
"At this point in time... it's been handled haphazardly, heavy-handedly and with weight, and those measures have created a great deal of uncertainty. Those storm clouds, they're still circling, they haven't gone anywhere," said Tony Sycamore, market analyst at IG.
Euro exchange rate
The euro stabilized at 1.1359, hovering near Friday's three-year high, as investors flocked to the single currency following the dollar's crisis of confidence.
"I think we could see the euro trading at $1.20 by something like ... end of July, early August," IG's Sycamore said.
Growing nervousness among investors about holding US assets has led some to divest and move money to other markets, including Europe, which has helped the euro rise.
Dedollarization
"The market is re-assessing the structural attractiveness of the dollar as the world's global reserve currency and is undergoing a process of rapid de-dollarisation," George Saravelos, head of currency research at Deutsche Bank, wrote in a client note.
According to him, the process of de-dollarization is not yet complete, but it is still unclear how this process will develop and what the final new equilibrium in the global financial architecture will be.
Last week's sharp sell-off in the US Treasury bond market put enormous pressure on the dollar.
Deutsche Bank says nowhere is this more evident than in the ongoing and simultaneous collapse in the US currency and bond markets.
The dollar fell to a 10-year low against the Swiss franc at 0.8188. The pound sterling retained most of its 1.7% gain from last week to settle at $1.3099. Against the yen, the dollar fell 0.22% to 143.24. The Australian dollar rose by 0.08% to 0.6299, continuing its more than 4% rise compared to last week.
