The Davos Economic Forum recently held in Switzerland can be described as a steady stream. First, it took 15 years for U.S. President Trump to break the convention of the U.S. president not participating in Davos. Then U.S. Secretary of the Treasury Nuchin put aside his words , Bluntly devaluation of the dollar can bring revitalization of the U.S. economy, the era of a strong dollar is about to be abandoned by the U.S. government! This wave of speech exploded all the public opinion, dominated the world for more than 50 years of dollar hegemony is the end? Or is it just a game designed by the U.S. government?
Indeed, in the first month of 2018, the U.S. dollar continued the deteriorating trend in 2017. Since January, the ICE U.S. dollar index has slipped 3.26%. This has also caused the U.S. dollar index to fall by more than 14% since the beginning of 2017, The dollar has depreciated nearly 2% against all other currencies and is at its lowest level in more than three years.
The United States in order to allow the dollar back to the local, well-designed dollar devaluation!
In fact, the weakness of the U.S. dollar has been pushed by the U.S. government. In a number of public statements since Trump became the U.S. president, he said he is more hopeful that the U.S. dollar will weaken and that a series of isolated economic measures such as trade protection and tariff collection have also been adopted recently Are deliberately devaluing the dollar.
The merit of depreciation of the dollar is even more obvious. However, only the depreciation of the U.S. dollar can accelerate the return of the U.S. dollar to the rest of the world. This is in line with the original intention of the U.S. tax reform and even the recent brief closure of the U.S. federal government. Once Apple, Microsoft, Johnson, U.S. transnational corporations, such as Keswick and Procter & Gamble, have turned overseas sales and profits into dollars, boosting the value of their overseas revenues and profits and reducing the cost of overseas purchases by U.S. consumers, as well as reducing the cost of domestic products to domestic buyers More attractive, these will lead to the United States such as India, Brazil and other emerging market countries will be hollowed out by the United States.
Have to say that this Trump administration's "wool dollar devaluation to cut the world" is very clever, as the United States remains the most stable reserve currency on the planet, and "as always strong," short-term weakening not only conducive to the dollar back , But also led to the shrinking of assets denominated in U.S. dollars. For instance, U.S. treasury bonds, the U.S. $ 3 trillion foreign exchange reserves in China, and the U.S. $ 1.16 trillion Treasury bill will be seriously watered down. Even from the end of last year to the beginning of this year, China is the largest U.S. Creditor countries have reduced their holdings of a few U.S. Treasuries.
If Trump is overbearing, he will hurt himself.
Everything has its two sides. If the dollar continues to depreciate, the attractiveness of the euro, yen and even the yuan as a reserve currency will increase rapidly. As the Trump administration continues to pressure the dollar down, the market will see massive speculation , Short the dollar. And as the renminbi continues to strengthen, more than 60 countries in the world regard the renminbi as the currency of their own country's foreign exchange reserves. If the dollar weakens again and again, the renminbi takes the advantage of chasing the new markets such as Iran and Brazil to accept the renminbi. Then Trump Will pay for his recklessness.
Moreover, Trump insisted on devaluing the dollar, the most injured is the United States residents. Because the cost of Americans buying overseas goods is getting higher and higher, and secondly, popular goods such as oil, metals and agricultural products denominated in U.S. dollars will rise in price due to the depreciation of the U.S. dollar, which further increases the pressure on Americans. So, it does not matter that Trump mouths, in fact, behind the manipulation of the dollar is still very cautious.