US dollar policy sees dramatic reversal under Trump’s first month

Global Business

January saw the U.S. dollar fall by 2.6 percent against a basket of currencies after hitting 14-month high but by the end of the month, the U.S. Dollar Index had fallen 2.6 p, suffering its worst January decline in 30 years.

CGTN’s Karina Huber reports.

US dollar policy sees dramatic reversal under Trump's first month

US dollar policy sees dramatic reversal under Trump's first month

January saw the U.S. dollar fall by 2.6 percent against a basket of currencies after hitting 14-month high but by the end of the month, the U.S. Dollar Index had fallen 2.6 p, suffering its worst January decline in 30 years. CGTN’s Karina Huber reports.

The reversal came after a statement from U.S. President Donald Trump saying the dollar had become “too strong.” A strong dollar makes U.S. exports more expensive and hurts U.S. manufacturers, a sector Trump has vowed to revive.

Currency experts said the U.S. President has little to no control over the direction of the dollar. Market forces and monetary policy set by the independent Federal Reserve, are what drive the value of the currency.

“He can’t fire Janet Yellen or threaten to fire her over whether or not she raises or lowers the interest rates,” John Pickering, editor of The Street said.

The market expects the Fed to raise rates twice this year. Rate hikes traditionally boost the value of the dollar, but Christopher Veccio, senior currency strategist for DailyFX, said uncertainty over Trump administration policies on trade could push the dollar lower, despite interest rate increases.

A recent report by J.P. Morgan called policy emissions from the White House “erratic” and advised selling the dollar.