U.S dollar drops against major currencies, tension rises between America and China

The American dollar was down on Monday afternoon in London’s trading session giving up little of its gains from Friday’s trading session.

The U.S. Dollar Index that tracks the American dollar against a basket of other major currencies (like the Japanese yen, British pound sterling, Swedish Krona, Euro) dropped 0.10% to trade at 100.203 at the time this report was written.

What it means: Nigerians hoping to meet a foreign exchange payment obligation, transactions via the dollar to countries like Europe, Japan, would have the need to pay more dollars to fulfil such transactions

America and Chinese tensions got worse over the weekend after White House trade advisor Peter Navarro suggested in a “This Week” interview that Beijing sent “hundreds of thousands of Chinese on aircraft to Milan, New York and around the world” to spread the virus after hiding it from the world for two months.

In addition, the American dollar got more sad news as America’s Federal Reserve Chair Jerome Powell disclosed in a separate interview that America’s economy could shrink up to 30% in the Q2 2020 but will avoid a second Great Depression in the long term.

(READ MORE: Naira drops to N446 to $1 at black market as calls for currency adjustments increases.)

“At the fore of market participants’ minds is that we are seeing those (China) tensions just ratcheting higher, so there has been supporting for the U.S. dollar on the back of that,” Commonwealth Bank of Australia FX analyst Kim Mundy told CNBC.

“Also comments last week from Fed officials around the risks to the U.S. economy being skewed to the downside risks around the second wave of infection, I think that will also continue to underpin the U.S. dollar this week.”



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