The risk of U.S. intervention to rein in the dollar is rising as a tumbling Chinese yuan stokes speculation that a global currency war is getting underway.
Speculation is building that U.S. President Donald Trump may seek to weaken the dollar after China allowed the yuan to drop below the key level of 7 per greenback, strategists said. If the U.S. authorities do take action, this could sound the death knell of the strong-dollar policy that has been in place for more than two decades.
"If Trump feels that the U.S. economy is going to get on the back foot on the back of this, then absolutely intervention is something that could creep up," said Chris Weston, head of research at Pepperstone Group Ltd. in Melbourne. "If people genuinely believe that he's going to do it, they'll start selling the dollar." ...
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