How real is the currency intervention in the US
How real is the currency intervention in the USA. At the end of July 2019, the foreign exchange market is preparing to cut rates in the US Federal Reserve. This is due to the rhetoric of US Federal Reserve Chairman Powell. With all this, the actual value of the US dollar against a basket of major currencies remains at the level of November 2018, near the level of 97.00. The level corresponds to the high of 2018 and 2019. Despite the fundamental change in the monetary policy of the US Federal Reserve, they have officially abandoned the policy of raising interest rates and adheres to the policy of maintaining key interest rates at that moment.
US dollar index chart
Possible reasons for the intervention
The US President D. Trump comments about strong dollar and charges of a number of countries in currency manipulations remain the reason for the rumors in the market about foreign exchange intervention in the United States. At one time, the eurozone and China came under Trump’s accusations of currency manipulations.
It is no sense to talk about the US – China trade opposition in this article. But it is worth noting that the US claims to China’s monetary policy remain. It is worth to note Trump’s claims regarding the value of the US dollar and the euro. At the same time, Trump was repeatedly accused by the White House of undervaluing the euro against the dollar. This also undermines the US economy.
Trump’s election promises regarding the budget deficit and the development of the US economy can be one more reason for the intervention of the US dollar . Such statements will play a significant role in the US presidential election in 2020.
In the absence of actual results from the US trade war and the apparent dissatisfaction of the American public regarding the US foreign trade policy, the option of currency intervention by the US dollar looks very real. Especially given the fact that the Trump administration needs to show meaningful results before the election.
Therefore, the possibility of currency intervention in the US dollar looks very reasonable. Particulary in the conditions of a high degree of politicization of the market and the lack of obvious results from current methods. Especially given the high value of the US dollar in anticipation of easing monetary policy of the US Federal Reserve.
Due to the monetary policy management structure, the President of the United States and his administration do not have direct methods to intervene. But Trump also should not have a direct impact on the Fed Chairman. But the practice suggests the opposite, and therefore there is every reason to expect the advancement of intervention by the White House.
Anton Hanzenko