The euro was down 2% against the dollar in the fourth quarter, reaching its highest level in nearly nine quarters. The reason for such significant exchange rates is the new tariffs introduced by US President Donald Trump.
This is reported by RBC-Ukraine via Reuters.
Investors are encouraged by the dollar after Trump voted for austerity, it was reported that there was a message for US trading partners, according to the report.
The stink also hit safe-haven assets such as the Swiss franc, causing the dollar to weaken to a six-month low against other currencies.
The euro rose 2.2% to a six-month high of $1.1021. This became one of the largest internal growths in the world in 2015. The dollar weakened by 1.8% against the Japanese yen (to 146.65) and by 2.25% against the Swiss franc (to 0.8618).
Both the yen and the franc reached a six-month high against the dollar.
The British pound also rose 1.3% to 1.3178.
The report shows that the US shock shook the markets: world stock indices fell, and investors rushed to transfer money into bonds and gold. All because of the fear that a large-scale trade conflict could provoke a sharp rise in global economic growth and accelerate inflation.
Trust the crisis to the American dollar
Deutsche Bank has four ahead of the risk of a crisis and has confidence in the US dollar, indicating that significant changes in capital flows could outweigh the fundamentals of the foreign exchange market. This makes the currency exchange chaotic.
Investors are also stimulated by the fact that the activities of US trading partners may result in heavy moves, which will lead to an increase in prices.
Trump's new tariffs
Apparently, US President Donald Trump signed a decree introducing restrictions on the import of goods from over 180 countries. He explained at this point the need to respond to “unfair tariffs” as other powers stand in favor of American products.
According to the document, for certain countries mutual rates will be provided in the range from 11% to 48%, while for this purpose the “basic” rate is 10%. The blame has been allocated for Canada and Mexico, and the government policy should be regulated strictly.
In addition, Trump signed another decree, which introduced the US government regime through a threat to the trade deficit.
More details can be found in the new RBC-Ukraine material “Economic “catastrophe”. How Trump’s trade war is affecting light markets.”
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