The US might be tempted to depreciate the USD when the new debt has to be repaid – iTrustCapital

Tim Shaler, an Economist-in-Residence at iTrustCapital, believes the fiscal stimulus package passed by the Senate last week weighed on the USD as he says in an exclusive interview with FXStreet.

Key quotes

“The falling dollar and the very quickly rising stock market on Tuesday, Wednesday and Thursday last week were all driven by speculation and passage of the $2 trillion fiscal stimulus package.” 

“The US is about to borrow $2 trillion more dollars than previously expected, foreign exchange participants know that the US might be tempted to allow its currency to depreciate when all this new debt has to be repaid. That risk was immediately ‘priced in’ and the value of the dollar declined.” 

“If the US pursues a ‘strong dollar policy’ then the dollar may again rally against other currencies.”