Dollar falls to three-year low as Trump plots to sabotage Fed chair
The dollar has plunged to its weakest level in three years amid reports that Donald Trump is plotting to undermine the chair of the Federal Reserve.
The US president is considering naming his chosen successor to Jerome Powell by September or October, according to the Wall Street Journal, in a bid to create a 'shadow' Fed chief.
Mr Powell's term as Fed chair is due to end in 11 months, and a successor is usually announced three to four months in advance to allow for a smooth transition.
However, it is thought that by naming a successor earlier, Mr Trump's choice could influence the market by unveiling plans for more aggressive rate cuts.
It comes after the US president has repeatedly chastised Mr Powell for not cutting interest rates, describing him as 'terrible 'in his latest attack on Wednesday.
Mr Powell indicated to Congress on Wednesday that interest rates would likely remain on hold at the next Federal Open Market Committee meeting in July as policymakers try to work out the impact of Mr Trump's tariffs.
He said that the Fed was 'going to take a careful approach' about cutting interest rates, although he acknowledged that it could happen this year.
He said: 'If we make a mistake here, people will pay…the cost for a long time.'
Mr Trump's reported plan to undermine the Fed chair sent the dollar down to its lowest level in three years against major currencies.
The pound rose to more than $1.37, putting sterling at its highest level against the dollar since 2022, while the euro hit its strongest level since November 2021, nearing $1.17.
The dollar index, which measures the currency against six other units, is down 10pc this year and on course for a sixth straight month in the red, its worst run since 2017.
Mr Trump is considering former Fed governor Kevin Warsh and National Economic Council director Kevin Hassett as Mr Powell's successors, the Wall Street Journal said, as well as former World Bank president David Malpass and Fed governor Christopher Waller.
Scott Bessent, the Treasury secretary, is also a potential candidate.
Earlier this month, Mr Trump once again contemplated firing Mr Powell and even mused about making himself the Fed chair, although he subsequently backed off.
Asked if he is interviewing candidates, Mr Trump said on Wednesday: 'I know within three or four people who I'm going to pick.'
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