Recently, public opinion pointed out that the decline of the US dollar index is driven by not only the downward revision of the US economic growth rate and the increasing possibility of economic recession but also the waning confidence of investors in the US dollar and the flow of funds out of the United States. Many industry insiders said that what the United States has done is undermining people's confidence in the US dollar.
Narayana Kocherlakota, President of the Minneapolis Federal Reserve: The US dollar is weakening. Normally, when tariffs are expected to rise, the US dollar should strengthen. However, the fact is that the US dollar weakened at the same time as the tariff policy was introduced, which proves that investor preferences are changing.
François Villeroy de Galhau, Governor of the Banque de France: I believe that over the past few decades, American policies have always tried to maintain the dominant position of the US dollar. I believe the Trump administration also holds this view, but its actual actions are going in the opposite direction. What the United States has done over this period has undermined people's confidence in the US dollar.
Krishna Guha, Vice President of Evercore ISI: This is not a normal market correction. The rise in Treasury yields and the weakening of the US dollar convey the main message that capital is flowing from the United States to other markets, with international investors withdrawing funds from the United States. The withdrawal of capital from the United States reflects two things: first, the "exceptionalism" of the United States is fading; second, the attractiveness of risk-free US dollar assets as reserve assets worldwide is declining, due to the uncertainty of US government decisions, and the United States is destroying the international order it created.
Deutsche Bank recently warned that the trade conflict has caused damage to the US dollar, which is facing a confidence crisis. The policy decisions of the US government may lead to an acceleration of global "de-dollarization," as market participants reassess the appeal of the US dollar as the world's reserve currency. TD Securities stated that as the relative growth advantage of the United States compared to the rest of the world disappears, more and more investors are turning to assets in some markets in Europe and Asia, and negative views on the US dollar in the market are deepening rapidly.
Original article: https://www.toutiao.com/article/7492583438789149199/
Disclaimer: This article represents the author's own views. Please express your attitude by using the "thumbs up/thumbs down" buttons below.