The United States is a hundred dollars bills.
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The dollar was sliding and the impact of ripples on other currencies brought a mixture of relief and headache to central banks around the world.
The uncertainty about the American policy industry has led to the exit from the US dollar and the Secretary -General in recent weeks, with the dollar index weakened more than 9 % so far this year. Market monitors monitor more declines.
According to the survey of the director of international funds at Bank of America, the net 61 % of the participants expect a decrease in the value of the dollar over the next 12 months – a pessimistic view of the main investors for nearly 20 years.
the Exit from American origins It may reflect a wider crisis of confidence, with a possible indirect presence such as higher imported inflation with the weakness of the dollar.
Most central banks will be happy to see 10 % -20 % decreases in US dollars.
Adam Patton
The main currency analyst in instant currencies
The decrease in Greenback has estimated other currencies against it, especially safe havens such as the Japanese yen, Swiss Frank as well as the euro.
Since the beginning of the year, the Japanese yen strengthened more than 10 % against Greenback, while the Swiss franc and the euro have estimated about 11 %, according to LSEG data.
Regardless of safe havens, other currencies that are strengthened against the dollar this year, Mexican, include 5.5 % against the dollar, and the Canadian dollar, which was estimated at more than 4 %. The Polish Zloty strengthened more than 9 % while the Russian robe was estimated at more than 22 % against Greenback.
However, some emerging market currencies decreased despite the weakness in Greenback.
The Indonesian Vietnamese and Dong Dong weakened to a low standard for every US dollar earlier this month. Turkish pounds also reached its lowest level ever last week. The Chinese Yuan has achieved the lowest level in the dollar nearly two weeks ago, but has since been strengthened.
The breathing room to reduce prices?
With the exception of some exceptions, such as the Swiss National Bank, the weak US dollar is a relief for central governments and banks worldwide, analysts told CNBC.
“Most central banks will be happy to see 10 % -20 % decreases in US dollars,” said Adam Patton, chief currency analyst in Forexlevi. He added that the strength of the dollar was a constant problem for years and is difficult in countries with solid and soft pegs.
With the presence of many emerging market countries that have large debt -resistant debts, the weaker dollar reduces the real debt burden. In addition, the most soft local currency and the local currency tend to make imports relatively cheaper, which reduces inflation, thus allowing central banks to reduce prices to increase growth.
Patton said that the sale of the last US dollar provides more “respiratory room” to the central banks to reduce prices.
The dollar index last year
Thomas Robb, head of the Vice President Vice President, said that although the strongest local currency may help tame inflation through cheaper imports, it complicates the competitiveness of export, especially within the framework of the customs tariffs of the United States where Asia is exposed as the largest producer of commodities in the world.
Nick Reese, head of overall research in Europe, said that the currency value is likely to be more active through emerging markets, especially in Asia.
However, these emerging markets and Asian central banks will need to walk in a thin line, to avoid a capital trip and other risks.
“Emerging markets are facing an increase in inflation, debt, and capital flight risk, making reduction in the value of the currency value,” said Will Makarim, EXNESS Financial Market Strategy.
In addition, the US administration can view the value of the currency as a commercial measure that can attract revenge.
The Economy Director of Fitch said that the emerging market economies may be reluctant to reduce prices because they can affect the debt burden for local families and companies that borrowed US dollars. He added that the weakest local currency can also lead to capital flows in response to low interest changes with the United States.
For example, Muscatelli does not see the central bank reduction rates in Indonesia too much given the last currency fluctuations, but it stated that Korea and India may have space to reduce rates.
Currently, the preferred procedure seems to be avoiding a currency war, which will only add more instability to the local and global economy.
Brendan McCina
Wales Vargo
The European Central Bank has seized the opportunity provided by low inflation to reduce prices by another basis point at its meeting in April. “Most of the basic inflation measures indicate that inflation will settle throughout the medium -range goal of the Governing Council on a continuous basis,” the European Central Bank said on Thursday.
Another example is the Swiss National Bank, which has struggled with a strong franc for most of the past 15 years, the button. Exports of goods and services It constitutes more than 75 % of GDP in Switzerland The strong franc makes the Swiss goods more expensive outside.
“If the capital continues to flow, they may have to take radical measures to reduce the value,” he said. Investors flow to the franc during times of uncertainty, as in recent weeks, enhance the franc.
Central banks avoid reducing the value of the currency – at the present time
Reducing the value of the currency poses a risk to price growth and the monetary authorities will be careful not to inflation over its goals.
Brendan Makina, international economist at Wales Vargo, Brendan Makina, said that the risk of high inflation arising from the low value of the currency as well as customs tariffs – as countries in the United States respond – are likely to make central banks hesitate to follow the path of volunteering deviation.
Moreover, while most foreign central banks have theoretically, the frequency range to weaken its own currency, the possibility is still low in the current environment.
Whether it can be affected by a country of the value of its currency by several factors: the size of its FX reserves, exposure to foreign debt, its commercial balance, and the sensitivity of imported inflation.
The performance of the Swiss franc in the past year
Makina said: “The countries directed towards export with adequate reserves and low dependence on foreign debt will have more space for slope-but even those are likely to take carefully.”
The broader trend of commercial negotiations will be the key to how countries choose to act. Aside from China, many countries have shown a willingness to participate in commercial negotiations, and if these talks lead to a decrease in customs tariffs, central banks will not likely follow the weakest currencies.
In the current geopolitical climate, reducing the value of the currency can also call for revenge and the risks of currency manipulation, said VP Bank Rupf.
Although there is still a possibility that commercial tensions will lead to more protective results, which will lead central banks to reduce the value of their currencies.
“But at the present time, it seems that the preferred measure is to avoid a currency war, which will only add more instability to the local and global economy,” said Makina.
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2025-04-22 03:27:00
