Mighty US dollar feels heat as Trump’s tariffs spark trade turmoil

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SINGAPORE: In just a week, the dollar went to a safe haven for investors’ beaten boy, when US President Donald Trump’s friends and enemies have lost decades of confidence in the world’s reserve currency.

The sudden loss of confidence was not much tough than the Treasury Market, which saw the biggest weekly increase in borrowing costs since 1982 when offshore funds escaped.

“The United States, almost overnight, seems to have lost its safe places,” said Ray Atal, head of the FX strategy at the National Australia Bank.

“To some extent, there is a waste of trust … You are overcome that with the loss of immunity and the idea that in the short term, at least, it is the American economy that suffers from far more than the incidence of tariff front.”

The dollar, which has already existed for its worst year since 2017, fell a decade against Swiss France on Friday and reached its weakest level against the euro in more than three years.

“As a reserve currency, the entire base of the dollar is being effectively challenged, which we have seen since Trump’s elections,” Atal said.

It was the establishment of the Britton Woods System in 1944, which strengthened the global Greenback stance. After the war, planners devised such a system to stabilize the exchange rate and deepen international trade, and the dollar prevailed even after Britain Woods’ broken in the early 1970s.

But Trump’s recent actions regarding trade have shaken ideas. Within a few days, he imposed heavy taxes on the world, suddenly turned a turn on his decision and intensified the trade war with China, which raised questions about the US administration’s relief.

Globally, stocks have shed trillions of dollars and have gone into the global markets.

“Regardless of how the next 90 days are prepared, the international reputation of the United States has been abolished,” said Richard Atsinga, the chief economist of the ANZ group.

“The global economy is in a weak state than before.”

Martin Whiteton, head of the Financial Markets strategy in West PAC, said this week has shown a widespread change in US dollar exchange, “sharp flash crash” in US treasury production and heavy sales in the dollar “away from liquidity and safety and safety shields.”

“Losing or reducing credibility as a financial safe haven, lenders’ willingness to lend to the United States has diminished,” he said.

Matters are so bad that the United States now has to pay a higher price for investors to take their money than Italy, Spain or Greece.

Certainly, some believe the dollar sales may be temporary.

“Once the uncertainty is reduced, tariff rates are fixed, we will see that the dollar is becoming stronger once again, because the fact is that it has its own prices and its prices,” said Francis Tan, the chief strategic Francis Tan of Asia.

But even if it proves to be short -term, there is no bad news for investors to stand as a safety of the dollar.

For those who have piled up trillions of dollars in recent decades in the US markets, resulting in a sharp dollar reduction may result in higher interest rates as pricing at home, which is bad for bonds and equity.

At the end of 2024, foreigners had US $ 33 trillion and stocks.

Chris Wood, the world head of the Equity Strategy in Jeffrez in Jeffrez, said, “The Trump administration’s expensive agenda for reform of the international financial system is almost neglected by the reality of the United States’ highly dependent on the foreign capital, as is its pure international investment.”