President-elect Donald Trump's shock comment that the dollar is too strong suggests the U.S. is about to declare as dead a two-decade policy of publicly favoring a strong currency.
"There's no question that the Trump administration would not want a strong dollar. A strong dollar does nothing good for whatever Trump is basically trying to do," said David Woo, Bank of America Merrill Lynch's head of global rates and foreign exchange research. "Yes, the U.S. fundamental story is bullish for the U.S. dollar, but the problem here is they actually don't want a strong dollar. I think it's going to go up. However, it's going to be a much more volatile climb."
Trump made his comment, where he said the so-called border-adjustment tax proposed by Congress is too complicated to enact. That tax is part of a proposed corporate tax overhaul and would tax imported goods at the border at a proposed 20 percent. Some economists say the dollar could rise sharply in response, by as much as 25 percent, which is not in his interest
"This is the first time we have a president-elect say the dollar has gone too far," said Marc Chandler, chief foreign exchange strategist at Brown Brothers Harriman. "He's saying things and doing things that no president has ever done before."
If the new President is successful implementing new reforms and policies that can jump start the economy, this will have a positive impact on the dollar, more or less and USD will be stronger than the rest of the currencies, but so long there is a balance.
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