Latest news with #USdollar
New York Times
3 hours ago
- Business
- New York Times
As the Dollar Slides, the Euro Is Picking Up Speed
The chaotic rollout of President Trump's tariffs has prompted investors to question long-held assumptions about the safety and stability of the U.S. dollar, which has plunged in value this year. In the hunt for alternatives, many have turned to the euro. The euro has risen more than 11 percent against the dollar since the start of the year, reaching its highest level in four years, at $1.18. The euro has also gained against other major currencies over that period, including the Japanese yen, British pound, Canadian dollar and South Korean won, suggesting that its strength is more than a reflection of the dollar's weakness. Christine Lagarde, the president of the European Central Bank, said this moment was an opportunity for the euro to gain global clout. 'We are witnessing a profound shift in the global order: Open markets and multilateral rules are fracturing, and even the dominant role of the U.S. dollar, the cornerstone of the system, is no longer certain,' she wrote last week. The dollar's role as the world's reserve currency gives the United States an 'exorbitant privilege' — a term coined begrudgingly by a French politician in the 1960s. Because investors, governments and central banks around the world seek the safe, predictable returns of dollar-denominated assets like Treasury bonds, there is a robust, built-in demand for dollars. That makes it easier for the U.S. government to borrow and boosts the spending power of American consumers. The eurozone, which is made up of the 20 countries that use the euro and rivals the United States in terms of size and wealth, has never attracted investors in the same way. The euro ranks a distant second to the dollar in terms of global use. The euro's recent rise is a major reversal from just three years ago, when it dropped to parity with the dollar because investors feared the damage of surging inflation and Russia's invasion of Ukraine. And it is a world away from the eurozone debt crisis last decade, when at times it seemed like the currency union was at risk of crumbling. As welcome as the euro's recovery from those episodes has been — the euro is trading near a record high against the currencies of dozens of major trading partners — it is also possible to have too much of a good thing. The Euro Rises Up Index of the euro's value against a trade-weighted average of 41 currencies used by the eurozone's biggest trading partners. Source: European Central Bank By The New York Times As money flows into the euro and euro-denominated assets like German government bonds, economists and executives warn that the currency's strength could hurt exporters. They are already contending with Mr. Trump's tariffs making their goods more expensive for buyers abroad as well as increased competition from Chinese rivals in key markets. 'Further euro strength is likely to be self-defeating,' said Valentin Marinov, a currency strategist at Crédit Agricole, a French bank. Exports were already likely to weaken and become a drag on the eurozone economy because of U.S. tariffs and European government policies that would encourage more imports. After a surge in energy prices led to years of fighting to bring inflation down, the European Central Bank, which sets interest rates for the eurozone, now faces the prospect that inflation could be too low. The bank forecasts inflation to average 1.6 percent next year, notably below its 2 percent target. That's partly because of the impact of a strong euro, which makes imports cheaper. Some policymakers have said there is a risk of sluggish inflation becoming entrenched, which is a familiar problem for the region. For nearly a decade until 2021, the central bank kept its key interest rates below zero in hopes of spurring faster economic growth and encouraging prices to rise steadily. That, policymakers hoped, would feed through to higher wage growth and better living standards. E.C.B. officials are expected to keep interest rates steady when they meet this week, but analysts are adding to bets they could cut rates again later this year, if the economic outlook darkens or the euro's strength pushes inflation forecasts even lower. Reducing interest rates tends to weaken a currency, but the euro's recent strength has come, notably, as the E.C.B. cut rates eight times in a year. Luis de Guindos, the vice president of the central bank, said that if the euro climbed above $1.20, that 'would be much more complicated.' Some big European companies have warned about the effect of the strong currency on their earnings, especially in export-heavy Germany. SAP, a software firm that recently became Europe's most valuable public company, said that every one-cent increase in the euro-dollar exchange rate results in a 30 million-euro decline in revenues, without currency hedges. Adidas, the sportswear brand, said that a strong euro has 'negative translation effects' on its overseas sales. Daimler, a truck maker, said that fluctuations on the euro-dollar rate 'could significantly impact' its financial performance. Where the euro goes next is hard to predict. It is currently trading at around $1.17, and analysts surveyed by Bloomberg expect it to continuing strengthening, to $1.21 next year. But Mr. Marinov of Crédit Agricole said he believed that traders had gotten ahead of themselves: He expects the euro to fall back toward $1.10 next year. The currency's rally this year does not necessarily mean there will be a lasting shift toward the euro, in which it accounts for a larger share of central banks' reserves or is used in more cross-border payments. Ms. Lagarde of the E.C.B. said that seizing the moment for a 'global euro' would take a concerted effort to bolster the bloc's fragmented economy, streamline its governance and deepen its capital markets, among other things. 'A step towards greater international prominence for our currency will not happen by default: It must be earned,' she said.
Malay Mail
8 hours ago
- Business
- Malay Mail
Ringgit edges higher against US dollar ahead of tariff deadline
KUALA LUMPUR, July 22 — The ringgit closed higher against the US dollar on Tuesday, amid a mixed performance in regional currencies, as investors adopted a wait-and-see approach ahead of the United States (US) tariff negotiation deadline, an analyst said. At 6 pm, the ringgit rose to 4.2300/2370 against the greenback, compared with Monday's close of 4.2320/2365. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said there is an impression that the tariff negotiations could extend beyond the Aug 1 deadline. 'Asian currency performance against the US dollar was rather mixed, as the Chinese yuan, Thai baht and Korean won depreciated, while the Indonesian rupiah and the Philippines peso strengthened. 'The ringgit opened on a stronger footing in the morning session, rising to as high as RM4.2273 against the US dollar. However, it hovered around RM4.2325 during the afternoon session,' he told Bernama. Meanwhile, SPI Asset Management managing partner Stephen Innes said the ringgit traded sideways as local traders remained cautious, noting that a negotiated compromise with Washington could pave the way for modest gains, especially if the tariff rate comes in below expectations. 'For now, traders are marking time. But this calm will not last forever. Aug 1 is not just a tariff deadline, it is the next macro landmine on Asia's summer calendar,' he added. At the close, the ringgit traded lower against a basket of major currencies. It dipped against the Japanese yen to 2.8690/8739 from 2.8612/8644, fell against the British pound to 5.7088/7183 from 5.6954/7015 and declined versus the euro to 4.9512/9594 from 4.9277/9330 at Monday's close. The local note also traded mostly lower against most Asean currencies. It depreciated vis-à-vis the Singapore dollar to 3.3011/3071 from 3.2990/3028, weakened against the Thai baht to 13.0899/1172 from 13.0754/0954, and edged down versus the Philippine peso to 7.41/7.43 from 7.40/7.41. The ringgit, however, traded slightly higher against the Indonesian rupiah at 259.1/259.7 from 259.2/259.6. — Bernama
Zawya
16 hours ago
- Business
- Zawya
Gold prices rise to over one-month high on softer dollar, bond yields
Gold prices climbed on Tuesday to their highest point in more than a month, supported by a weaker U.S. dollar and lower Treasury yields, as investors looked for progress in trade talks ahead of an August 1 deadline. FUNDAMENTALS * Spot gold was steady at $3,390.73 per ounce, as of 0112 GMT, after hitting its highest since June 17 earlier in the session. U.S. gold futures held their ground at $3,404.20. * The U.S. dollar index was hovering near a more than one-week low against its rivals, making greenback-priced gold less expensive for other currency holders, while benchmark 10-year U.S. Treasury yields hit a more than one-week low on Monday. * The European Union is exploring a broader set of possible counter measures against the United States as prospects for an acceptable trade agreement with Washington fade, according to EU diplomats. * Trade negotiations have yet to yield any meaningful deals as the clock ticks down on U.S. President Donald Trump's August 1 tariff deadline. * Also on radar, the European Central Bank is expected to hold interest rates steady at 2.0% following a string of cuts at the end of its policy meeting on July 24. The U.S. Federal Reserve monetary policy is scheduled for next week. * Traders are pricing about a 59% chance of a rate cut by the Fed in September, according to the CME FedWatch Tool. Gold tends to perform well in a low-interest-rate environment. * Meanwhile, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.36% to 947.06 tons on Monday from 943.62 tons on Friday. * China brought in 63 metric tons of gold last month, the lowest amount since January, data from the General Administration of Customs showed on Sunday. * Spot silver edged 0.1% higher to $38.93 per ounce, platinum added 0.4% to $1,444.05 and palladium eased 0.2% to $1,262.35. (Reporting by Brijesh Patel in Bengaluru; Editing by Sherry Jacob-Phillips)
Free Malaysia Today
a day ago
- Business
- Free Malaysia Today
Ringgit closes higher amid Japan's political uncertainty
KUALA LUMPUR : The ringgit extended its gains against the US dollar at today's close, as the greenback struggled to appreciate amid political uncertainties in Japan, said an analyst. SPI Asset Management managing partner Stephen Innes said the ringgit trended higher, supported by the election setback for Japan's Prime Minister Shigeru Ishiba's coalition, which did not trigger broader market volatility. 'The absence of contagion allowed Asian and other emerging market currencies, including the ringgit, to edge higher and strengthen modestly,' he told Bernama. Echoing Innes, Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said the ringgit traded firmer in tandem with a 0.13% decline in the US Dollar Index to 98.268 points, as major currencies such as the euro, yen, and the British pound all appreciated against the greenback. 'Despite uncertainties surrounding Japanese politics, the US dollar is struggling to appreciate, yet this has not resulted in a weak Japanese yen,' he said. On that note, Afzanizam said the ringgit was generally firmer against the US dollar, with the pair hovering around RM4.2375 in the afternoon, compared to RM4.2493 during the morning session. At 6pm, the ringgit rose to 4.2320/4.2365 against the greenback, compared to Friday's close of 4.2410/4.2455. At the close, the ringgit was traded mostly higher against a basket of major currencies. It strengthened against the British pound to 5.6954/5.7015 from 5.6999/5.7060 and advanced versus the euro to 4.9277/4.9330 from 4.9336/4.9388 at Friday's close. However, it fell against the Japanese yen to 2.8612/2.8644 from 2.8517/2.8549. Meanwhile, the local currency rose vis-à-vis the Singapore dollar to 3.2990/3.3028 from 3.3027/3.3065, and gained against the Thai baht to 13.0754/13.0954 from 13.3027/13.3065. Additionally, the ringgit appreciated against the Indonesian rupiah to 259.2/259.6 from 260.2/260.6 and edged up versus the Philippine peso to 7.40/7.41 from 7.41/7.43 previously.
Malay Mail
a day ago
- Business
- Malay Mail
Ringgit extends gains to close higher amid Japan political uncertainty
KUALA LUMPUR, July 21 — The ringgit extended its gains against the US dollar at today's close, as the greenback struggled to appreciate amid political uncertainties in Japan, said an analyst. At 6pm, the ringgit rose to 4.2320/2365 against the greenback, compared to Friday's close of 4.2410/2455. SPI Asset Management managing partner Stephen Innes said the ringgit trended higher, supported by the election setback for Japan's Prime Minister Shigeru Ishiba's coalition, which did not trigger broader market volatility. 'The absence of contagion allowed Asian and other emerging market currencies, including the ringgit, to edge higher and strengthen modestly,' he told Bernama. Echoing Innes, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the ringgit traded firmer in tandem with a 0.13 per cent decline in the US Dollar Index to 98.268 points, as major currencies such as the euro, yen, and the British pound all appreciated against the greenback. 'Despite uncertainties surrounding Japanese politics, the US dollar is struggling to appreciate, yet this has not resulted in a weak Japanese yen,' he said. On that note, Mohd Afzanizam said the ringgit was generally firmer against the US dollar, with the pair hovering around RM4.2375 in the afternoon, compared to RM4.2493 during the morning session. At the close, the ringgit was traded mostly higher against a basket of major currencies. It strengthened against the British pound to 5.6954/7015 from 5.6999/7060 and advanced versus the euro to 4.9277/9330 from 4.9336/9388 at Friday's close. However, it fell against the Japanese yen to 2.8612/8644 from 2.8517/8549. Meanwhile, the local note rose vis-à-vis the Singapore dollar to 3.2990/3028 from 3.3027/3065, and gained against the Thai baht to 13.0754/0954 from 13.3027/3065. Additionally, the ringgit appreciated against the Indonesian rupiah to 259.2/259.6 from 260.2/260.6 and edged up versus the Philippine peso to 7.40/7.41 from 7.41/7.43 previously. — Bernama
