Financial Association, April 22 - "The USD is our currency, but it's your problem" - these words from former American Treasury Secretary Connally over half a century ago have been continually validated over the past decades.

And now, the issues surrounding the USD exchange rates still seem to exist:

Unlike the significant strength of the USD in recent years, this time the concern has shifted to the USD "falling too quickly"...

Market data shows that, $USD (USDindex.FX)$The decline this month is almost unprecedented in the past decade or so. The ICE USD fell below the 98 mark on Monday, reaching its lowest point in three years. Meanwhile, the monthly decline of the USD index has broadened to over 5% so far in April. It is worth noting that the last time the USD experienced such a severe monthly drop was back in 2009 when the Federal Reserve first "turned on the money printer" (QE1).

This wave of the USD's decline has led to a significant appreciation against the USD for almost all G10 currencies and most Emerging Markets currencies:

For instance, the USD against the Swiss Franc dropped to a 10-year low of 0.8040 overnight, while the Euro against the USD reached a high of 1.1574, the highest level since November 2021. The USD against the Japanese Yen also briefly fell to a seven-month low of 140.09.

However, have you considered that in such a sensitive time, with the smoke of the Trump trade war still in the air, the USD falling so rapidly and sharply is certainly not a good thing for the entire world?

The sharp decline in the USD intensifies the "growing pains" of global trade.

It is well known that the USD is the main settlement currency for the operation of the global trade and financial system, and fluctuations in the USD have always had a significant impact on the global economy and imports and exports.

Currently, for overseas Dealers selling various goods to the USA, the significant decline in the USD is bringing a "second blow" following the trade war—intensifying the losses caused by Trump's high import tariffs.

"For overseas exporters, the weakening USD makes it impossible for them to offset the impact of tariffs on American consumer through exchange rate effects," pointed out Derek Halpenny, head of global market research at Mitsubishi UFJ Bank in London. "This will undoubtedly exacerbate the negative impacts."

The depreciation of the USD not only shrinks the profits of foreign companies' branches in the USA when converted to the Euro or Japanese Yen, but it also makes products produced by foreign companies more expensive for American consumers.

As the Exchange Rates of the Japanese Yen rose from 1 USD to 157 yen at the beginning of the year to now 1 USD to 141 yen, Japan's largest Auto Manufacturer.$Toyota Motor (TM.US)$Recently, it has been anticipated that profits will face pressure. For many years, the weakness of the yen has somewhat boosted the profitability of Toyota Motor and other large exporters in Japan. In Europe, investment bank UBS Group recently stated that fluctuations in USD could also weaken.$PRADA (01913.HK)$the performance of luxury goods companies such as LVMH, as well as beverage distributors like Kweichow Moutai and Pernod Ricard.

Deutsche Bank has even recently lowered the profit growth expectations for the companies in the Europe Stoxx 600 Index from 6% to 4%, citing weakened demand and a stronger Euro. Deutsche Bank warned that if the Euro remains at its current level, its growth forecast could be further downgraded by one percentage point.

In fact, for central bank decision-makers around the world, it is not difficult to see that they have clearly been troubled by this issue over the past week...

Against the backdrop of the continuous rise of the Euro, the European Central Bank announced a 25 basis point rate cut last Thursday, without daring to delay even for a moment. The Swiss National Bank will not hold its next meeting until June, but some investors believe that the bank, which has been closely monitoring the Forex market, may urgently cut rates to help lower the Swiss Franc exchange rate. This year, the Swiss Franc has risen by over 10% against the USD, increasing the likelihood of deflation in the country, while making its characteristic export products such as watches and high-precision machinery more expensive.

The Bank of Japan paused its rate hike actions in March, and investors have recently reduced their bets on future rate hikes by the bank. Bank of Japan Governor Kazuo Ueda stated last Wednesday that tariffs are approaching a 'bad scenario', which may prompt a response from the central bank.

The question arises: Is this scene deliberately created by Trump?

With the significant devaluation of the USD, it begins to cast more shadows on the Global economy and Trade. An underlying question naturally emerges:

Is this scene (the significant devaluation of the USD) deliberately created by Trump? It should be noted that the Exchange rate issue is precisely one of the themes widely discussed in the 'Mar-a-Lago Agreement' over the past few months.

Apart from insiders from Trump's team, there may currently be no one who can provide a convincing answer to this question. However, one thing is clear: Trump himself hopes to see the devaluation of the USD to benefit American Manufacturers. As for the reasons and processes behind the current selling pressure on the USD— the 'triple whammy' of American Stocks, Bonds, and Forex has begun to seriously shake people's confidence in the USD, even damaging the foundation of the USD as a reserve currency, whether this is something the Trump team welcomes is clearly a big question mark.

In fact, Trump's stance on Exchange rate policy has always been 'wanting both'— wanting the benefits of a devalued USD (which is Bullish for exports and domestic manufacturing), while also wanting to maintain the USD's dominant position in the Global market (which requires stable or even appreciating USD to safeguard).

However, it is well known that it is often difficult to achieve both in worldly affairs!

In the past few weeks, the sharp decline of the dollar, including the explosive fallout from the U.S. Treasury basis trade, was actually unexpected by many market observers. Traditional economic theory suggests that when an economy faces tariff shocks, non-USD currencies tend to weaken, which helps lower Commodity export prices to offset tariff costs.

However, the current reality is that investors have reacted to Trump's erratic trade policies by selling off dollar assets, reversing the massive bullish positions built on years of "American Exceptionalism" expectations. As investors sell off dollar assets, they are exchanging their funds back into their local currencies, which has driven up the value of non-USD currencies.

The continuous depreciation of the dollar has even sparked concerns in the market about the extent to which U.S. economic trade policy shifts might impact the economy, and it has begun to raise doubts about the stability of the dollar's status as a safe-haven currency.

In any case, if Trump is solely pursuing dollar depreciation while ignoring a series of unsettling signals indicating that the dominance of American Financial position is beginning to waver, he may ultimately only end up "picking up sesame seeds and losing watermelons"...

Editor/Rocky