A miniature of President Trump pointing at a US dollar bill
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(New York = Yonhap News) Correspondent Lee Ji-heon reports: Amid ongoing concerns about trust in US dollar assets, expectations that US and Japanese foreign exchange authorities may intervene to support the yen’s value have led the dollar’s value to drop to its lowest level in four years.
On this day, the dollar index, which reflects the value of the dollar against six major currencies at the ICE Futures Exchange, fell 1.2% compared to the previous session, closing at 95.86 as the New York Stock Exchange ended.
This is the lowest level since February 2022, marking a four-year low.
The dollar’s value has been on a weakening trend for four consecutive trading days due to recent concerns over the Federal Reserve’s (Fed) independence being compromised and President Donald Trump’s threat to annex Greenland, leading to weakened trust in so-called dollar assets.
Debates around “Sell America” (selling US assets) or “debasement trade” have resurfaced, and gold prices compared to the dollar have continued to rally.
President Trump’s remarks that “the dollar is great” and his seemingly indifferent attitude towards the recent dollar weakness further fueled the decline.
When asked by reporters at the White House before departing for his schedule in Iowa whether he was concerned about the dollar’s weakness, President Trump replied, “No, I think it’s great.”
Market participants took President Trump’s comments to mean he wasn’t worried about the dollar’s recent weakening, and following his remarks, the dollar’s value declined further.
Additionally, the aftermath of a fatal shooting incident by immigration officials in Minneapolis, which led Democratic senators to question the Department of Homeland Security’s budget, increased the likelihood of a federal government shutdown, contributing to the dollar’s depreciation.
Karl Schamotta, chief market strategist at payment firm CoPay, told Reuters, “As the US government moves towards another shutdown, policy uncertainty is surging again,” adding, “This is deepening the ‘Sell America’ trade that has dominated the market all year.”
Furthermore, ongoing concerns that the US and Japan might intervene in the foreign exchange market to support the yen’s value have also contributed to the dollar’s decline.
Earlier, Reuters reported on the 23rd that the New York Federal Reserve (FRB) conducted a review of the yen’s exchange rate against the dollar with foreign exchange market dealers, hinting at possible market intervention, citing industry sources. Although the US Treasury and the New York FRB did not confirm this, Reuters conveyed that foreign exchange market participants remain cautious about potential government intervention.