The dollar’s strength is unusual. It’s over 1420

The dollar’s strength is unusual. It’s over 1420 won in terms of the dollar’s exchange rate, and the dollar index has already exceeded 98. The euro, the yen, and the yuan have all weakened against the dollar. Earlier this year, when U.S. exceptionalism reached its peak, it was said that it would exceed 1,500 won. It was a time when the “Trump = dollar strengthened” equation was established. But after Liberation Day in April, as the dollar shook, the “Trump = dollar weakened” equation was established. And at the center of it was the Mar-a-Lago agreement. To bridge the trade deficit, Trump wanted to weaken the dollar. Now, the “Trump = dollar strengthened” logic is gaining momentum.

In the case of the dollar exchange rate… I think the concentration is quite high. Since Korea has experienced a foreign exchange crisis, it is highly sensitive to rising exchange rates. When the exchange rate rises, the anxiety reaches its peak. And for that reason, the exchange rate, which had been stably pressed, must have risen above 1,200 won… 1,300 won, further raising the issue of rising exchange rates. On the other hand, I also have strong memories of the exchange rate moving sideways around 1,150 won in the long run… Back to the past… Expectations are also high that the exchange rate will return to the level of 1,150 won, which is considered normal. Memories of the foreign exchange crisis and expectations for a return to the familiar exchange rate (1,150 won) are pulling the dollar’s exchange rate at both ends. If this happens, if there is a strong movement in one direction… And the tendency of the exchange rate to get sucked in at a fast pace in that direction. Either way, if there’s a movement of about 50 won, from then on, all public opinion is focused on that direction. Anyway… From the moment it goes from 1350 won to 1400 won, I feel like the upward sentiment of the exchange rate is really strong. And at the center of it is 350 billion dollars of investment.

350 billion dollars of internal discussions… Negotiations with the United States seem to be stalled. The biggest problem is that our companies are getting hit with 25 percent tariffs. Compared to Japan and Europe at 15 percent… It’s a pretty bad condition. If you accept $350 billion, the exchange rate will skyrocket due to a large outflow of capital… If not accepted, the prolonged stalemate will cause the exchange rate to rise due to concerns about slowing growth and a decline in trade surplus. Now, I feel like the exchange rate is going up gently, focusing on the latter. This is something that other countries don’t have… It’s a weak factor unique to the won.

It is also worth noting that the global dollar continues to be strong. At the core of this is the expectation of a strong U.S. economy and concerns of slowing growth in other countries. These two are working together. A case in point is New Zealand, which opened its currency war by cutting interest rates by 50 basis points on the previous day. The New Zealand dollar weakened significantly. The Japanese yen also seems to be rapidly weakening on the news that Japan’s tightening transition will be slowed significantly after the emergence of Takaiichi. If Japan’s export competitiveness increases with 15% tariffs, and the yen weakens… Wouldn’t it have a significant advantage in exports? Yes… It paints a picture of export growth in both tariff and exchange rate. In fact, Takaiichi mentioned that raising interest rates is not appropriate when Japan is growing so fast. The weak currency of my country refers to the strong currency of other countries. The weak currency of other countries has contributed relatively to the appreciation of the dollar.

And even more importantly, the U.S. exceptionalism that’s getting stronger again, just like we did at the beginning of the year. The focus on the U.S. asset market is getting stronger again. The money flow into the U.S. has to sell the local currency and buy the dollar and go in. And when the price of U.S. assets goes up like this… U.S. Asset Holders Driven By This Rise in Asset Prices… The so-called high-income earners’ consumption is going to explode, which will drive the growth of the United States. The rise in asset prices coupled with the AI boom, and the expectation of stronger U.S. growth… This is how I draw season 2 of American exceptionalism once again. It ends up with three things… “U.S. exceptionalism Season 2 + inducing the weak local currency of non-U.S. currencies + $350 billion issue” … This seems to explain the current exchange rate of 1420 won and the dollar index above 98.5.

So is this going to continue? That’s the whole point. The U.S. economy is good… If that consumption continues… And when the dollar hits its peak… The U.S. trade deficit is not likely to be solved easily. Now it’s called Myron. In myron report.. And that’s what you can see in Lighthizer’s comments. In the case of the United States with a trade deficit, the weak dollar should turn the trade deficit around… The dollar doesn’t weaken. He points out that the biggest reason is that other countries are investing in attractive U.S. financial assets. And this is how non-U.S. countries are investing in U.S. financial assets for their own benefit… It’s not only profitable, it’s the logic that the strong dollar (weak local currency) continues to feed off the honey in exports. So, you have to take away those unfair returns. That’s the whole point of Myron’s argument, for example, not paying interest to foreigners who have invested in government bonds (the commission on interest income) or almost interest-free inducing investment in perpetual bonds (which is similar to a $350 billion investment… T.T)… Tax investment funds crossing the U.S. border (taxation on capital) … These are the things that were mentioned.

There’s a phrase, Benign Neglect, which the U.S. is usually generously dismissive of. About the dollar’s strength… But if the dollar strengthens to an unacceptable level.. Almost as obsessed as they are, they put pressure on other countries to release that dollar strength. So when do you put pressure on them… As I said before… the strength of the dollar