Dollar Under Pressure
The US dollar continued its downward trend in Asian markets on Thursday, eroding some of Wednesday's rebound. Market concerns over currency devaluation have once again overshadowed the impact of the Treasury Secretary's reaffirmation of the strong dollar policy.
Shifting Market Sentiment
Noted investor Jeffrey Gundlach pointed out that the dollar no longer functions as a traditional safe-haven asset, with investors preferring tangible assets like precious metals to hedge against risks.
Policy Ambiguity Sparks Debate
- Ensemble Capital CIO Damien Loh noted that policymakers have adopted a 'strategic ambiguity' approach toward the dollar
- He explained that a comprehensive weak dollar policy could trigger a self-reinforcing depreciation trend
- Despite official support for a strong dollar, market participants widely anticipate policymakers would accept a gradual weakening
Analysts believe the dollar's movement reflects market worries about the economic outlook and continuous scrutiny of policy direction.