Lagarde: US Dollar Weakens Amid Uncertainty and Loss of Confidence in US Policies

Lagarde: US Dollar Weakens Amid Uncertainty and Loss of Confidence in US Policies

European Central Bank (ECB) President Christine Lagarde commented in a recent interview with La Tribune Dimanche on the surprising weakening of the US Dollar despite the usual expectations of strength during times of uncertainty. According to Lagarde, the dollar's decline can be attributed to growing uncertainty and a loss of confidence in US policies, particularly among certain segments of the financial markets.

“It’s surprising to note that in a period of uncertainty when we should have otherwise seen the dollar rising significantly, the opposite happened. It doesn’t make sense, but it can be attributed to the uncertainty and loss of confidence in US policies on the part of some segments of the financial markets,” Lagarde stated.

She pointed out that the ongoing challenges in the US—such as questions over the rule of law, the judiciary, and trade rules—have contributed to the erosion of confidence. In contrast, Europe is seen as a politically and economically stable region, providing a sense of security to global investors. Lagarde emphasized that Europe’s stability is becoming increasingly attractive in comparison to the uncertainty surrounding the US political and economic landscape.

Lagarde's remarks come at a time when global markets are closely monitoring the implications of US domestic policies, especially regarding their impact on the dollar and broader financial markets.