Weaker greenback favors US economyby Andrew Wong Wai-hong
People from all walks of life often describe US President Donald Trump as "crazy" because of controversial remarks that he has been making which always generate a negative backlash.
Because of this, the US dollar is negatively affected.
While his popularity has recovered, it is believed that the greenback might slip further because of his administration's political problems.There is not much reason to have high expectations of the US dollar.
One of the key points to focus on is Trump's move to bring to his cabinet top Goldman Sachs executives, including Gary Cohn as director of the national economic council and Steven Mnuchin as treasury secretary.
With veteran bankers now in government, setting the dollar's direction should not be difficult.
The greenback's current weakness is favorable to the US as it will boost its exports, one of Trump's key election pledges.
It will also improve global demand for commodities and investors won't be overly focused on US dollar assets, which is good for the global financial market.
But why will Trump move to stimulate commodity prices and the global financial market? Why will ex- Goldman Sachs executives, now in Trump's administration, suggest a weakening of the dollar to drive up global asset prices?
For several reasons. The first is if global financial markets continue to keep dollar assets strong, global economy will eventually weaken. And in the event of any weakening, the US economy will be subjected again to recessionary pressures due to imbalances in asset prices.
Is a weak dollar really their long- term strategy?
We will tackle this issue again next week.
Source: The Standard
http://www.thestandard.com.hk/section-n ... 1016&sid=2
It's all about "how much you made when you were right" & "how little you lost when you were wrong"