A rising U.S. dollar is raising hackles overseas and getting the attention of investors at home and abroad. But it isn’t clear that authorities can do much about the rise — or that it’s yet likely to undercut U.S. equities.
“Excessive moves in foreign-exchange rates have negative effects on the economy by bringing uncertainties to companies and households,” said Masato Kanda, vice finance minister for international affairs, according to The Wall Street Journal. “We won’t rule out any option and will take appropriate action, if this trend continues.”
“FX talk is cheap if it is doesn’t come with convincing data/market conditions that supports decisive and meaningful action,” Moya wrote. “The ECB will struggle to convince markets they can hike into a deteriorating outlook. Japanese officials are still only about halfway through their best verbal intervention threats. A gradual declining yuan is not China’s biggest problem, the property crisis and contagion risks are getting too very uncomfortable levels.
But the dollar’s moves likely aren’t sufficient to create real problems just yet, said Ross Mayfield, investment strategy analyst at Baird.