As prospects for interest rate cuts by the U.S. Federal Reserve recede, the dollar’s power against Asian currency depreciation is drawing attention.
Former President Trump weighs in on the economic impact of a strong dollar, which could reduce demand for U.S. exports and make goods produced and sold in cheaper currencies more attractive to importers. Be the speaker.
President Trump took to the Truth social platform on Tuesday morning to lament that the dollar had hit a 34-year high against the Japanese yen, discouraging the practice of devaluing currencies to promote exports.
“When I was president, I spent a lot of time talking about Japan and China, especially that we can’t do that,” he wrote Tuesday morning.
“It sounds good to stupid people, but it’s a dire situation for manufacturers and other manufacturers. They can’t really compete and they lose a lot of business in ‘smart’ countries,” he says. , will be forced to build factories or do other things,” he wrote. “This is what made Japan and China become giants years ago.”
At a trilateral ministerial meeting last week, the governments of the United States, Japan and South Korea issued an unusual joint statement on the pressures facing Asian currencies and their recent depreciation against the dollar.
It said the two countries recognized “Japan and South Korea’s serious concerns over the recent sharp depreciation of the Japanese yen and South Korean won.”
Analysts said the statement could signal U.S. tacit approval of moves by Japan and South Korea to support their currencies.
“U.S. Treasury Secretary Yellen acknowledged Japan’s concerns about the sharp depreciation of the yen in a joint statement…suggesting that the U.S. would give the green light to intervene in both currencies,” Deutsche Bank researchers wrote to investors. I wrote this in my memo.
As of Tuesday afternoon, the dollar was trading at a ratio of 154.81 yen to 1, hovering near its highest level since 1990.
The dollar-to-Chinese yuan ratio was 1:7.25, the highest level since November. The Korean won ratio was 1:1,373.86, below the recent high of 1,391 won, but still close to the highest level since November 2022.
The dollar’s volatility in foreign exchange markets has been noticeable in recent months as interest rates remain high, U.S. Treasury yields steadily rise and foreign investment flows into the country.
Deutsche Bank’s USD Volatility Index jumped to 7.18 last week after hovering around 6 since February.
Bank of Japan Governor Kazuo Ueda told reporters last week that the Bank of Japan could consider further rate hikes after raising interest rates for the first time in 17 years in March and moving away from the era of basic quantitative easing. He said it was sexual.
If the yen’s impact on inflation becomes “so large that it cannot be ignored, monetary policy adjustments may be made,” Ueda said Thursday, as reported by Japanese news outlet Nikkei. The statement was made after the regional finance ministers’ meeting.
Interest rates in Japan are currently between 0.0 and 0.1%. Japan’s inflation rate reached an annual rate of 2.7% in March.
China’s central bank officials are considering how much to ease regulations on the yuan as they try to revive the country’s struggling economy. China’s one-year loan prime rate remained unchanged at 3.45% this week, while the five-year loan prime rate remained unchanged at 3.95%.
The US dollar has also appreciated recently against other international currencies such as the British pound and the euro. This momentum is generated by a scenario in which U.S. interest rates rise for an extended period of time following better-than-expected economic data.
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