The US dollar depreciated on Monday to its lowest point since March 2022 as investor confidence in the United States economy took another hit.
According to Reuters, the dollar suffered a decline due to President Donald Trump’s attacks on the Federal Reserve Chairman, Jerome Powell.
Against a basket of currencies, the dollar slid as low as 97.923 on Monday. The currency also fell to a decade-low against the Swiss franc, while the euro broke above $1.15, its highest since November 2021.
Sterling rose to its highest since September at $1.34 against the dollar, while the Australian dollar scaled a four-month high of $0.6430. The New Zealand dollar reclaimed the $0.6000 level for the first time in more than five months.
The social media tirade at the Fed Chair potentially put the central bank’s independence under threat, analysts said.
Via social media, Trump called Powell a “major loser” and demanded that he lower interest rates immediately.
Experts said that Trump’s sweeping tariffs and uncertainty over his trade policies have sent global markets into a tailspin and darkened the outlook for the world’s largest economy, in turn weakening the dollar as investors pull money out of U.S. assets.
On the slide of the dollar against other currencies, the head of macro research for Asia ex-Japan at Mizuho, Vishnu Varathan, said, “It’s a buffet for any dollar bear…from the heightened uncertainty around the self-harm from tariffs to the loss of faith even prior to the Powell news.”
Last Wednesday, Powell said that US economic growth will be hit and prices will rise for consumers as a result of Trump’s tariffs. He said the import taxes were larger than the bank had expected, going beyond the higher end of its estimates.
“The level of the tariff increases announced so far is significantly larger than anticipated. The same is likely to be true of the economic effects, which will include higher inflation and slower growth,” he said.
Meanwhile, the naira recorded a mixed performance in the foreign exchange market over the past week. While the naira saw a slight appreciation in the official market, closing at 1,599.94/$ on Thursday, compared to 1,603.78/$ in the previous week, it experienced a significant depreciation in the parallel market.
