US Dollar Slumps for Fifth Straight Day Amid Escalating Tariff Tensions
The US dollar went lower, falling 0.7 per cent and recording its fifth straight day of losses. The decline sent the Dollar Index (DXY), which measures the greenback against a basket of major world currencies, to its lowest level in three years.
Since April, the DXY has lost over 4 per cent, after US President Donald Trump declared 'Liberation Day' and announced tough tariff policies. The steep drop in the dollar is a mirror of increasing investor concern regarding the direction of the US economy, with many scaling down their American assets.
Despite President Trump's reassurances last week that the US dollar would still be "the currency of choice," market moods are still nervous. He also asserted that any nation attempting to abandon the dollar could be persuaded back into line with a single phone call. But little has been done to soothe market nerves with his words, as global investors prepare for an extended period of uncertainty.
The latest tit-for-tat tariff war between the US and China has only heightened those fears. The US recently raised tariffs on Chinese imports to 145 per cent, leading Beijing to retaliate by increasing its own tariffs on American imports from 84 per cent to 125 per cent. The current trade war has sparked a global market sell-off, say analysts, that even traditionally safe-haven assets such as US Treasuries are not immune to.
The 10-year US Treasury bond yield is on course for its largest weekly gain since 2001, which points to investors requiring higher returns as a result of perceived risks in the US market.
The Indian rupee saw its biggest single-day rise in more than two years on Friday, gaining 0.75 per cent against the dollar when the dollar fell and global crude oil prices slipped. The rupee closed 86.05 per dollar after Thursday's close of 86.70, as sentiment switched away from US assets.
