The US dollar is weakening this morning after comments from president-elect Donald Trump that the greenback was “too strong” against the Chinese currency.
“Our companies can’t compete with them [Chinese companies] now because our currency is too strong. And it’s killing us”, Mr Trump told the Wall Street Journal.
His comments have helped soften the dollar index, which measures the greenback against a basket of its major trading currencies, by 0.5 per cent on Tuesday to 101.17.
Mr Trump’s election has propelled the dollar to 13-year highs with his promises to spend big on infrastructure and cut taxes ramping up expectations for higher US economic growth and a faster pace of interest rate hikes this year.
The currency has gained nearly 5 per cent since his election in late November, raising concern that its strength will hamper emerging market economies by leading to a tightening in global credit conditions.
In the interview, Mr Trump said China’s currency was “dropping like a rock”. Before his election, he promised to declare Beijing a currency manipulator in his first day at the White House.
“Timing the Trump backlash against the strong dollar was always going to be difficult, but it seems to have started”, said Chris Turner at ING.
“Rhetoric from Trump’s White House will slow, rather than reverse, the dollar bull trend this year”, he added.
Chart via Bloomberg
