TOKYO- The dollar languished near its lowest level in three years on Tuesday as President Donald Trump’s unrelenting attacks on the Federal Reserve chairman further eroded investor confidence in the US economy.
The US currency sagged close to the decade-low reached the previous day against the Swiss franc, and hovered near a 3-1/2-year trough versus the euro.
Trump ramped up his criticism of Fed chief Jerome Powell on Monday in a Truth Social post, calling him a “major loser” and demanding that he lower interest rates “NOW” or risk an economic slowdown.
On Friday, White House economic adviser Kevin Hassett said the president and his team were continuing to study whether they could fire Powell, a day after Trump said Powell’s termination “cannot come fast enough”.
Trump’s onslaught comes after Powell last week said the central bank can afford to be patient in judging how to set policy, and that rates should not be lowered until it is clearer US tariff plans won’t stoke persistently higher inflation.
“There’s this terrible stalemate” between Trump and Powell, fomenting “concern that there will be some sort of action taken to replace Powell, which would create a real panic in the dollar,” said Eric Kuby, chief investment officer at North Star Investment Management.
Moreover, on the trade front, “every day that there are no deals struck to provide any relief, it creates continued anxiety” that Trump’s policies in their current form could be destructive for the economy, Kuby said.
