NEW YORK: The US dollar tumbled on Wednesday on news reports that US President Donald Trump is planning to fire Federal Reserve Chair Jerome Powell, but pared the drop after Trump denied the plans.
Trump said that he is not planning on doing anything, while also noting that he is unhappy that Powell is being too slow to cut interest rates.
A source earlier told Reuters that Trump is open to the idea of firing Powell and polled some Republican lawmakers on firing Powell and received a positive response.
Removing Powell before his term ends in May would be negative for the dollar as it would undermine credibility in the US financial system and the dollar as a safe-haven currency.
“What can kill the value of the US dollar, what can absolutely destroy faith in the US dollar, is attacking in any way, shape, or form the independence and authority of the Federal Reserve,” said Juan Perez, senior director of trading at Monex USA in Washington.
Trump has railed against Powell for months for not easing rates and the Trump administration has also criticised cost overruns on a $2.5 billion renovation of the Fed’s Washington headquarters.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was last down 0.27% on the day at 98.31, with the euro up 0.34% at $1.1639.
Against the Japanese yen, the dollar weakened 0.52% to 148.1.
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