NEW YORK: The dollar gyrated Thursday on President Donald Trump’s comments favoring a strong US currency, while European and Asian equity bourses retreated as their currencies gained ground.
One day after US Treasury Secretary Steven Mnuchin seemed to embrace a cheap US currency, Trump told CNBC Mnuchin’s remarks had been taken out of context, and restated the traditional US policy.
“Ultimately, I want to see a strong dollar,” Trump said, sparking a rally for the US currency, which had hit a three-year low against the euro earlier in the day.
A 2200 GMT, the euro was at $1.2393, down a hair from a day earlier and well below its session peak of $1.254.
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Mnuchin on Thursday tried to clarify his comments, but European Central Bank chief Mario Draghi rebuked the choice of language, and said volatility in the currency markets “represents a source of uncertainty.”
Without naming Mnuchin, Draghi indicated the wording ran counter to the commitment reflected in the International Monetary Fund statement from October, to “refrain from competitive devaluations, and… not target our exchange rates for competitive purposes.”
Trump’s remarks were not reported until late afternoon US time, after stock markets in Europe and Asia had already closed.
Amid the uproar on foreign exchange markets, the rising euro had pushed the main blue-chip indices into the red, despite positive data out of the region’s economic powerhouse, Germany.
London’s FTSE closed 0.4 percent lower, Frankfurt’s DAX fell 0.9 percent and the CAC 40 in Paris shed 0.3 percent.
The pattern was similar in Tokyo, where the Nikkei slid 1.1 percent against a spiking yen.
Masayuki Kubota, chief strategist at Rakuten Securities, said in a commentary that exchange rates have been affected frequently by political factors including Trump’s comments.
And “if US President Trump makes comments criticizing a cheaper yen, the yen’s depreciation may halt,” Kubota said.
Source: Brecorder.com
