Tuesday 22 August 2017

Dollar falls to five month low after Donald Trump warns currency was 'getting too strong'

Donald Trump
Donald Trump

Ellie Donnelly

The dollar has fallen to a five month low after US President Donald Trump said that the currency was “getting too strong”.

Speaking to the Wall Street Journal, Mr Trump said that he would also prefer that the Federal Reserve keep interest rates low.

The comments highlight the president’s protectionist stance, however they may contradict his tax reform policies and plans for increased spending on major infrastructure projects.

Trump’s comments broke with a long-standing practice of both U.S. Democratic and Republican administrations of refraining from commenting on policy set by the independent Federal Reserve.

“This is a dramatic shift in rhetoric from (Trump),” said IronFX analyst Sakis Paraskevov in Cyprus.

“Bearing in mind the administration’s continued verbal intervention in the FX market, we think that any near-term rallies in the dollar could stay relatively limited, despite the Fed raising rates at a moderate pace.”

The US currency hit a five-month low of 108.73 in Asian trading but later steadied around 109 yen.

Additional reporting by Reuters

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