Trump’s desire to trash the US dollar could be blocked by the Fed & China

October 10, 2024 at 11:41PM
Bloomberg (gated) cite a note from Michael Feroli, chief US economist at JPMorgan on Trump’s policy desire to weaken the US dollar.

In brief:

it conflicts with his tariff policy, theory predicts that the currency of a tariff-imposing country should appreciate following higher import duties

Trump might use the US Treasury’s Exchange Stabilization Fund to influence exchange rates without support from the Federal Reserve or Congress … but intervention is more successful when it appears to have the backing of monetary authorities, and when the move is done in concert with other global central banks … “The elephant in the room is China,” Feroli wrote. “One obvious problem with this policy of countervailing currency intervention against China is that China maintains capital controls such that any potential intervention by the US would need to be undertaken in the offshore CNH market.”

Here is the link to the Bloomberg piece for more if you can access it.

Trump’s Bid to Weaken Dollar Would Face Hurdles, JPMorgan Says

This article was written by Eamonn Sheridan at www.forexlive.com.