Dollar logs worst January in 30 years after Trump slams China, Japan over currencies

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The ICE dollar index down 2.6 per cent for January

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The ICE dollar Index, a measure of the greenback’s strength against six rival currencies, traded at 99.795 on Wednesday afternoon. Photo: Reuters

Laura He

Published: 11:30am, 1 Feb 2017Updated: 10:52pm, 1 Feb 2017

A key US dollar index hovered at its lowest level in more than two months on Wednesday and posted its worst January performance in three decades after US President Donald Trump and his trade adviser hit out at China, Japan and Germany over currency devaluation to gain a trade advantage over the US.

The ICE dollar index, a measure of the greenback’s strength against six rival currencies, traded at 99.795 on Wednesday afternoon after touching a low of 99.603 in the morning. It was the lowest level for the index since November 11.

For January, the index shed 2.6 per cent, the worst performance for the first month of the year since 1987, when it declined 3.6 per cent, according to Bloomberg data.

Trump on Tuesday criticised Japan and China for devaluing their currencies in a meeting with pharmaceutical executives. His top trade adviser, Peter Navarro, who heads the new US National Trade Council, also accused Germany of using a “grossly undervalued” euro to gain an advantage over its main trade partners, according to a report by the Financial Times.

Trump had signalled he preferred a weak dollar, said Tim Condon, an analyst for ING Asia.

“We expect the US to start playing the devaluation game and its trade negotiators to cite large bilateral trade surpluses with the US as grounds for China, Japan and [South] Korea to appreciate their currencies,” he said.