The dollar American accelerates the descent, ballast from a slowdown in US inflation in March, more marked than expected. A momentary recovery had been recorded yesterday, after the announcement of Donald Trump of a suspension of customs supervision. The so -called “green ticket” yields 1.52% on the euro, reaching 1.1282on the minimum from October 2024. The American currency also loses 0.83% compared to the pound, at 1.3015, and 2.42% to 1.2202 compared to the Swiss franc, considered a good refuge.
Why is the dollar going down?
That the dollar weakens in response to U.S. duties It is an obvious consequence. In theory, duties should reduce the value of non -US currencies, decreasing the demand by the United States. However, the value of the green ticket is influenced by a series of factors, not only by the commercial balance, and one of the most relevant is the difference between national and international interest rates. In summary, the dollar tends to strengthen itself compared to other currencies when US interest rates are higher than those of comparable economies. Higher rates make US debt more attractive for investors and, since the debt is called in dollars, this question stimulates the currency request.
In the fourth quarter of 2024, the yields of the treasury securities have increased constantly, since investors, in response to a slowdown in disinflation and a surprisingly robust labor market, have reduced expectations on future cuts in interest rates. At the same time, the global economy showed signs of weakness, especially in Europe, where the European Central Bank It seemed ready to continue the cuts of the rates.
However, in recent weeks, various developments in Washington, such as duties, recession risk and a growing climate of geopolitical uncertainty, have begun to threaten the economic solidity that allowed interest rates to remain high. In fact, some economists have warned that the duties could trigger a “stagflation” phase, with slow growth and high inflation.
Movements similar to those of an emerging currency
Filippo DiodovichSenior Market Strategist of IG Italia, explains:
“The green ticket is affected by the increase in the expectations of a possible recession in the States, the loss of trust of many investors on the stability of the US economy led by Donald Trump, of the climate of uncertainty on the next moves of the current administration in terms of duties, on the outflow of capital from the United States towards other international shores, on the loss of the status of” Refuge currency “”.
Initially, Wall Street had foreseen that the duties could strengthen the dollar, but contrary to expectations the US currency lost more than 7% from its settlement and more than 2% since Trump presented his commercial policy last week. The movements of the green ticket so strong downwards are comparable, at the moment, to those of a currency of a market emerging “And not the currency of the strongest economy in the world”.
What changes for investors
A weaker dollar can make the US exports more competitive, potentially stimulating economic growth. In addition, it could increase the profits of multinationals with large operations abroad.
But at the same time, a weaker dollar also involves an increase in the cost of imports. Theoretically, this should encourage greater internal production, but currently the United States do not have a sufficient manufacturing base to replace imports. According to the Department of Commerce, just over half of the goods and services purchased in the United States in 2023 was produced internally.
