Former Treasury Secretary Summers warns: Trump's approach will shake the dominance of the US dollar

Former U.S. Treasury Secretary Lawrence Summers said President Trump's capricious policy actions and rhetoric posed the biggest risk to the dollar's dominance in the world economy in half a century.

The Trump approach threatens the status of the US dollar

Former U.S. Treasury Secretary Lawrence Summers said in an interview with Bloomberg TV on Wednesday:

Our broad approach to the rest of the world poses the greatest threat to the dollar's position as the currency at the heart of the world economy over the past five decades.

Summers pointed out earlier this week that the sell-off in the US stock market reflects investors' concerns about the direction of US policy. He also criticized the government's efforts, led by the Department of Government Efficiency, to reduce government spending, believing that measures including reducing the number of IRS tax examiners will undermine efforts to increase government revenue.

Trump and his campaign "identified some important directions that could make the economy better" last year, such as reducing certain regulations and addressing areas where the U.S. is being exploited in trade. But the way they handled it was terrible.

Summers said that if he were still at the Treasury Department, he would be afraid of the possible consequences of such statements made by the president against other countries.

When people are selling dollars, China and Europe become magnets for capital, which shocks me.

He also pointed to the recent tendency of Europe and China to "get closer to each other".

Given the borrowing needs of the US federal government, Summers is very worried about the status of the dollar, especially in light of President Trump's criticism of countries traditionally buying US Treasuries.

The U.S. stock market has performed poorly recently, with the U.S. dollar index falling.

The US S&P 500 index has fallen 1.03% so far this year, significantly underperforming the ( German DAX index, which has risen 16%) and the Hong Kong stock market (Hang Seng Index rose 20%).

The US dollar index has fallen by nearly 4% so far this year, with the main decline concentrated in March. Trump had previously warned China and Japan not to maintain their own interests through currency devaluation. The Japanese yen has appreciated by over 5% this year, and the USD/JPY exchange rate recently fell below 149, hitting a new low since November last year.

This article by former US Treasury Secretary Summers warned: Trump's approach will shake the dominance of the US dollar first appeared in Chain News ABMedia.