Dollar Hobbled by Economic Worries; Euro Remains in Favor

US dollar drifted within a tight range on Monday, pressured by lower Treasury yields - Reuters
US dollar drifted within a tight range on Monday, pressured by lower Treasury yields - Reuters
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Dollar Hobbled by Economic Worries; Euro Remains in Favor

US dollar drifted within a tight range on Monday, pressured by lower Treasury yields - Reuters
US dollar drifted within a tight range on Monday, pressured by lower Treasury yields - Reuters

The dollar hovered near a five-month low against major peers on Monday, bruised by President Donald Trump's erratic trade policies and soft economic data, at a time when other currencies, including the euro, benefit from domestic drivers.

The euro was last at $1.0905, up 0.2% on the day, and heading back towards the $1.0947 it hit last week, its highest since October 11.

The Japanese yen was also marginally stronger on the day at 148.48 per dollar, again after hitting its strongest in five months last week at 146.5 to the dollar.

That left the dollar index, which measures the US currency against its six major counterparts, at 103.5, just off its five-month trough of 103.21 reached last Tuesday, Reuters reported.

Currency markets have undergone a shift in recent months, as traders re-evaluate their initial expectations that Trump's economic policies would both support the dollar and cause other currencies to weaken.

In fact the reverse has happened, and analysts at Societe Generale said on Monday that they had changed their currency forecasts "to reflect Germany's planned fiscal changes, the US economy's self-inflicted (relative) fragility, and Japan’s escape from deflation".

They see the euro at $1.13 by year-end and the yen at 139 per dollar.



Russian Rouble Weakens After Trump-Putin Call 

A woman walks outside the Kremlin on a sunny day in Moscow, Russia, 18 March 2025. (EPA)
A woman walks outside the Kremlin on a sunny day in Moscow, Russia, 18 March 2025. (EPA)
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Russian Rouble Weakens After Trump-Putin Call 

A woman walks outside the Kremlin on a sunny day in Moscow, Russia, 18 March 2025. (EPA)
A woman walks outside the Kremlin on a sunny day in Moscow, Russia, 18 March 2025. (EPA)

The Russian rouble interrupted its rally and weakened against both the US dollar and China's yuan on Wednesday following a conversation between US President Donald Trump and Russian President Vladimir Putin that focused on the war in Ukraine.

In the telephone call, Putin agreed to stop attacking Ukrainian energy facilities temporarily but declined to endorse a full 30-day ceasefire that Trump had hoped would be the first step toward a permanent peace deal.

By 0840 GMT, the rouble was down 1.3% at 82.80 against the dollar in the over-the-counter market. Against the Chinese yuan, the rouble was down 1.2% at 11.36 in trade on the Moscow Stock Exchange (MOEX).

The Russian currency hit its strongest levels against both the dollar and the yuan since June 2024 this week. It is up 27% against the dollar so far this year on expectations of easing tensions between Russia and the United States.

Russia's Deputy Prime Minister Alexander Novak said on Tuesday that a return of foreign investors to the Russian market and resulting capital inflows played a role in the rouble rally.

"We are also observing an inflow of foreign capital into the domestic market, taking into account the geopolitical situation," Novak was quoted in the Russian media as saying.

The stronger rouble is helping the central bank fight inflation, its main headache. However, it is also dealing a blow to exporting companies as well as state budget revenues, which depend heavily on oil and gas exports that are traded in dollars.

Denis Popov from PSB bank noted that Novak's statement was the first official confirmation of capital inflows taking place as international investors begin to eye Russian assets again, creating the potential for further strengthening of the rouble.

"Considering that the end of March should see an increase in currency sales by exporters, the risks of further strengthening of the rouble are very high," Popov said.