Trump strong dollar warning sends US currency tumbling

President Donald Trump has triggered a sharp decline in the US dollar by criticizing the currency’s strength on the back of increased confidence in his presidency.

“I think our dollar is getting too strong, and partially that's my fault because people have confidence in me. But that's hurting - that will hurt ultimately,” said the US President as quoted by The Wall Street Journal.

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“Look, there’s some very good things about a strong dollar, but usually speaking the best thing about it is that it sounds good. It’s very, very hard to compete when you have a strong dollar and other countries are devaluing their currency,” stressed the president.

Following the comment, the dollar index which measures the US currency against a basket of of currencies, dropped to 100.01 in Asian trade early Thursday, compared to levels above 101 earlier this week.

The greenback tumbled to its lowest level since November against the Japanese yen. The US currency was trading at 108.70 yen per dollar, down from levels above 111 yen earlier in the week.

However, analysts say the dollar will stabilize on rumors the US Federal Reserve may raise interest rates as early as June.

“Donald Trump is the president of the US, so I don't blame market participants for taking him seriously. But Trump is very mercurial, very unpredictable. He's got a long track record of completely reversing himself,” said Jim Rickards, editor of Strategic Intelligence, in an interview with CNBC.

The economist stressed that the dollar’s weakness wouldn't last long.

“Will the real Donald Trump stand up? You cannot invest on President Trump's quirks and quips. He could just as well say something else tomorrow,” Lim Say Boon, chief investment officer at DBS Bank wrote in a note to CNBC.

President Trump also said the upcoming report by the US Treasury Department wouldn’t label China as a currency manipulator. Earlier, Trump sharply criticized Beijing for the management of the yuan as well as alleged attempts to acquire a trade advantage over the US artificially.

“While we can count on the fingers of one hand the number of times Presidents Obama or Bush talked about the US dollar’s value, President Trump is, of course, happy to be different. It is clear that he does not regard talking about the currency as manipulation, rather just plain speaking,” said Sean Callow, a senior currency strategist at Sydney-based Westpac Banking, as quoted by Bloomberg.

“Of course, he’s risking his credibility, but Trump doesn’t seem to care. The cheapest policy is one where you can move the currency around by word of mouth. So he might be encouraged,” Axel Merk, president of Merk Investments in San Francisco told the agency.