Shift to Local Currencies, Gold Won't Hit Dollar in Near Term – US Investor

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US dollars - Sputnik International
Donald Trump is making the dollar strong again through domestic economic policies and "temporary" tariffs, Wall Street analyst Charles Ortel told Sputnik, stressing that the recent national currencies slump in a number of states had been caused not by Washington's trade wars and sanctions, but vulnerabilities in their economic strategies.

The dollar is gaining strength amid US GDP growth and global turbulence prompted by Donald Trump's trade wars and the US's sanctions spree.

The Iranian rial has lost 50 percent of its value since the beginning of the year, the Turkish lira crisis is threatening to backfire on the euro; the ruble and the yuan have somewhat weakened against the dollar.

When asked whether Donald Trump could be accused of deliberately rocking the boat to solidify the dollar's position, Wall Street analyst and investor Charles Ortel noted that "trade competitors, no doubt, will accuse President Trump and his successors with taking unfair advantage (whether true or not)."

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He argues that the US and the world "will actually be better off the more we retreat from operating nation-states that are consumed in bureaucracy, and devoted to 'managing' the global private sector."

According to Ortel, flaws in economic policies, rather than Trump's assertive actions, have largely caused the currencies jolts.

The Wall Street analyst insists that "tariffs instituted by President Trump are designed to be temporary and to change behavior of nations that have gained from having access to US markets, while making it difficult for US exporters to serve their own consumers."

Trump is Strengthening the Dollar

The analyst underscored that he had long been a proponent of a strong dollar. In 2014 Ortel emphasized the necessity of making the US dollar "the strongest global currency" again in an op-ed for The Washington Times.

"Under President Trump, the American government has already reversed many years of bad policies that lessened investor interest in deploying risk capital within US borders," he said. "The impact of announced changes alone — lower corporate and personal income tax rates, and decisive elimination of regulations leap out — has prompted numerous capital investment projects, many of which target consumers inside America, which is the largest integrated market in the world, by far."

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Ortel opined that in contrast, Europe "remains wedded to job and growth crushing policies given the Euro-state's love of regulations, bureaucracy, and taxes, while it shoulders an aged population and has ever smaller cohorts of young and rising workers."

Meanwhile, Turkey, Iran, China and Russia are increasingly settling their payments in national currencies, while Tehran is turning to gold as a viable alternative to the dollar. When asked whether these moves threaten the dollar's dominance, the Wall Street analyst opined that in due course this trend would affect the buck.

"In time, an alternative that is backed by gold or some other form or basket of physical assets may rival the dollar, but that process is likely to take many years and will only succeed if the rival or rivals embrace economically sound policies," Ortel pointed out.

Will Nations Team Up to Counter Trump's Offensive?

Meanwhile, the EU signaled its support to Turkey, slamming Trump's tariff policies, which have exaggerated Ankara's currency crisis. Since the beginning of 2018, the lira has plummeted by 40 percent, prompting fears among southern European banks and German investors.

The question then arises whether the EU, Turkey and China can team up and withstand Washington's economic offensive.

Ortel believes that this is hardly likely due to the economic and political hardships that these countries are facing.

"The European 'Union' is already splintering in a process that could well accelerate as national elections and exit referenda continue," he suggested, commenting on the issue. "China is trying to cope with a multi-year capital investment bubble and attendant bad-debt overhang that threatens her equity markets even more than they have already suffered."

According to the investor, "When one looks closely at numbers, America's economy and our consumers stand out." He opined that "investors seeking to build commanding positions in many global industries will likely choose to compete inside the United States, rather than other places when forced to choose."

The views of the contributors do not necessarily reflect those of Sputnik.

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