US Dollar Witnesses Deepest Slide in 16 Years As Bond Behemoth Warns Global Reserve Status ‘Not Guaranteed’: Report
An asset manager of $ 1.7 Billion of dollars returns the US dollar, warning Trump's thrust to revitalize the American industries by increasing the prices eroding the domination of the USD.
Bond Giant Giant Pacific Investment Management Company (PIMCO) analysts said in an investment note that President Trump's trade war has launched uncertainty about the status of the dollar and American treasury bills as a package assets, reports Reuters.
The pimco market strategists say that investors are now wondering if American assets will remain the anchoring of the global financial system in the midst of Trump's brutal policy change according to which his administration claims will summarize manufacturing jobs in America.
“The United States has long enjoyed a privileged position, the dollar serving as global reserve currency and treasury bills as the essential reserve assets. However, this status is not guaranteed. If world capital takes place in American assets decrease, it could point to a more multipolar world with a reduced reduction on a singular reserve currency.“”
Investors starting to doubt the long-standing trend of American exceptionalism, Pimco warns that the door is now open to investors to remove their capital from the US dollar and treasury bills in the obligations issued by Europe, Japan, the United Kingdom and emerging economies.
Earlier this month, Trump signed an executive decree which imposed a 10% rate on all imported goods entering the United States, with the aim of safeguarding domestic manufacturing. The president also published a proclamation which slapped the reciprocal rates on dozens of countries.
This decision sparked a sharp drop in the US dollar index (DXY), which measures the USD strength compared to a basket of other major foreign currencies laid by volume.
The DXY dropped up to 6% this month, an open April 104.18 to as low as 97.92. The last time the Dxy slipped by around 6%was in May 2009, when the US economy collapsed due to the 2008 financial crisis.
The Dxy has been rebounded since and is negotiated at 99.58 at the end of Friday.
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