Impact of Trump’s Statements and Tariffs on the Dollar
Since Donald Trump, the President of the United States, took office, the US dollar has been depreciating against major currencies such as the euro, Swiss franc, Japanese yen, British pound, and Swedish krona.
Experts Attribute Weakness to Trade Policy Uncertainty
According to experts, the uncertainty surrounding Trump’s trade policies has weakened the US dollar. The Intercontinental Exchange’s Dollar Index (DXY), which measures the greenback against a basket of six reference currencies, has dropped by 8.54% from 108.49 to 99.23 units between January 20 and April 24. The DXY has also fallen by 8.53% this year.
Appreciating Currencies Against the Dollar
Since Trump became president, the most appreciated currencies against the dollar are the Russian ruble (18.89%), Swedish krona (14.16%), euro (9.84%), Danish krone (9.79%), Swiss franc (9.61%), and Norwegian krone (8.82%). Following these are the British pound (8.76%), Japanese yen (8.75%), New Zealand dollar (6.75%), Brazilian real (6.38%), and Mexican peso (5.75%).
Trade Policy Changes and Their Impact on the Dollar
Michael Cahill, Senior Currency Strategist at Goldman Sachs Research, highlighted in a report that changes in the US trade policy significantly affect the dollar.
Cahill noted that rising trade tensions and policies causing uncertainty are eroding consumer and business confidence.
“Changing perceptions of US governance and institutions are also affecting the attractiveness of US assets for foreign investors, and rapid policy shifts make it difficult for investors to consider outcomes not subject to high uncertainty,” he emphasized.
Experts from Barclays wrote that tariffs on Canada and Mexico, along with the lack of progress in resolving the Ukraine conflict, have deteriorated the dollar.
“The ongoing loss of credibility stemming from Trump’s actions has left the dollar in a particularly vulnerable position. Furthermore, Trump’s statements, such as the possibility of removing Federal Reserve Chair Jerome Powell, have exacerbated the dollar’s situation.”
Banamex, in a study, stated that “political uncertainty remains high, with external risks dominating over Trump’s tariff policies.”
