There commercial war entertained by President Trump would be only the visible part of one strategy that aims to depreciate the dollar And to re -finance the balance on the commercial front. This is revealed by a report by Generali Investmentwhich recalls the most recent statements of the US Treasury Secretary Scott Bessentwho has repeatedly reiterated his will to be an actor in a possible one in recent months New agreement to re -abine economies World Cup.
In short, the agreement would foresee the re -evaluation of currencies of the countries with positive commercial balance, especially China, Japan and Europeagainst the dollar, in the face of the failure to imposition rates by the US or their military security supply. A sort of taking or leaving.
The “Plaza” and “Louvre” agreements
Bessent refers to Two historical agreementswho went down in history like the Plaza and the Louvre Accord. The first ‘happened in 1985 when the major economies of the time met in New York, in the Plaza Hotel, with the goal of deprecate the dollartoo strong at the time compared to the German Marco and Japanese Yen, to correct American commercial imbalance, a situation similar to the current one. The dollar weakens considerably in the years following the use of the US to increase their exports.
The success was such that a second agreement had to be proceeded, which happened toLouvre Hotel in Paris in 1987, and aimed at stop excessive depreciation dollar consequent to the previous agreement.
But would a new agreement be possible today?
There cooperation it seems fashion Under the pressure of the new Trump administration, but the goals remain. The new administration would like a weaker dollarto be able to rebalance its commercial balance and be able to support national production capacity, after years of relocation.
An effect that will be guaranteed by necessity of Europe to accelerate the military expenditure and the major economies, such as the GermanyOf expand public spending. This means that Europe will grow more, the ECB will be forced to keep the higher rates And The euro will tend to appreciate. This is what has been happening on the financial markets since the beginning of the year, with the differential of ten -year rates between the USA and Germany passed from 220BP to the current 145, with the euro that went from 1,0350 to 1.09 and with the European bags that started overlap the American one.
What impact on the currency
On the world currency This change should involve a weaker dollar in the face of a revaluation of the Yen, the euro and the Chinese uniform. It would not be only the euro to benefit from this, but also the uniforms of the countries more strongly connected to the euro area, such as the Scandinavian uniforms or the countries of central-eastern Europe.
The International investors I am today overexposed on American assets. If the prospect of devaluation of the dollar or of a submarine of these assets compared to the international approval should continue could induce to induce repatriation of these assets with the consequent devaluation of the American uniform.
Foreign countries could decide to induce repatriation of these assets To finance infrastructure expenses or public expenses such as those announced by Germany recently.
If these assets are to start to submit the weight in the indices it should reduce over time by causing a outflow from investments from the dollar. Japan and China could be induced to re -evaluate their currencies or directly or indirectly as happened to Europe. In this sense, recent announcements by the Chinese authorities to support internal consumption go in this direction. All in line with what is desired today by the new American administration; Program that meets more at the interests of the Middle American, Trump’s electoral base and less than Wall Street.
