The U.S. dollar weakened further on Wednesday, hitting a two-week low as investors watched for clues at the Group of Seven (G-7) meeting about the Trump administration’s stance on the currency. The Bloomberg Dollar Spot Index fell 0.4%, marking its third consecutive day of decline.
Japanese Finance Minister Katsunobu Kato said last week he plans to discuss currency issues with his U.S. counterpart, Scott Bessent, this week.
This follows speculation that the Trump administration may favor a weaker dollar. South Korea has also confirmed it raised currency concerns during talks with the U.S. earlier this month.
Concerns about the growing U.S. budget deficit are also pressuring the dollar. Lawmakers are negotiating a tax-cut plan, with Republicans aiming to limit revenue losses to $4.5 trillion over the next decade.
Currently, the plan would reduce revenue by $3.8 trillion. Moody’s downgraded U.S. debt last week, pointing to ongoing large fiscal deficits as a key reason.
Moh Siong Sim, a foreign exchange strategist at Bank of Singapore Ltd., said rising worries about the budget deficit are pushing up long-term U.S. Treasury yields while weakening the dollar. He added this may indicate that global investors are starting to reduce their heavy exposure to U.S. assets amid concerns over America’s twin deficits.
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