BREAKING NEWS

Dollar hits new lows on Trump comments on currency, interest rates

By REUTERS

APRIL 13, 2017 06:52

NEW YORK - The dollar fell broadly on Wednesday after US President Donald Trump said the dollar was "getting too strong" and that he would prefer that the Federal Reserve keep interest rates low.

Trump also said, during an interview with the Wall Street Journal, that his administration would not label China a currency manipulator, reversing a campaign trail pledge to do so. He also left open the possibility of renominating Federal Reserve Chair Janet Yellen when her term expires next year.

The dollar index, which tracks the US currency against six major rivals, fell to its lowest since March 30 after the news.

"The market had a big reaction, but I think it was an overreaction," said Kathy Lien, managing director at BK Asset Management in New York. "He may just be hedging his bets by making sure that the American public realizes he’s not backing down on trade."

Lien also said she expected Trump's comments could weigh on the dollar in the long term. It has fallen every day this week as worries over geopolitical tensions have prompted investors into safe havens like the yen, US Treasuries and gold.

"The dollar’s already under pressure, so I think any excuse for further pressure is likely to bring the greenback even lower," Lien said.

The dollar fell by more than 1 percent against the yen on Tuesday, its biggest one-day fall in three months against the Japanese currency. The greenback fell below 110 yen for the first time since mid-November. On Wednesday, it furthered those losses and was last down 0.5 percent at 109.1 yen, its lowest since Nov. 17.

Against the traditionally safe-haven Swiss franc, the dollar dropped to 1.0024 franc, its lowest in a week.

The euro rose 0.6 percent against the dollar to a 6-day high of $1.0671.

The dollar also sank against the offshore Chinese yuan after Trump's comments. The typically little-moved Chinese currency fell 0.15 percent to a five-day low of 6.8847.

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