Financial commentator Jamie McGeever suggests that if former U.S. President Donald Trump aims to devalue the U.S. dollar, threatening to dismiss Federal Reserve Chair Jerome Powell might achieve that outcome. Trump's dissatisfaction with Powell's reluctance to cut interest rates dates back to his first term. However, his recent verbal attacks have escalated the situation, potentially turning the dollar's decline into a severe downturn.
This is not an exaggeration. The dollar has fallen by 9% this year, with nearly a 6% drop this month alone. Trump's tariffs have plunged the market into uncertainty and chaos, accelerating the dollar's slide. Measured against a basket of major currencies, the dollar might experience its largest monthly drop since the 2007-09 global financial crisis, marking the eighth-largest monthly decline since the introduction of the floating exchange rate over 50 years ago.
The historic sell-off is concerning policymakers, as it seems driven by doubts about U.S. decision-making and credibility. Forcibly removing a central bank head undermines a nation's economic decision-making and currency credibility, particularly for a country like the U.S., which plays a crucial role in the global financial system.