Muslim Ban By US President Donald Trump Weakens US Dollar And Global Stock Markets

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Muslim Ban By US President Donald Trump Weakens US Dollar And Global Stock Markets

Traders in the United States and across the world are fearful that the recently inaugurated US President’s immigration policies could prove destabilizing.

This is after the US dollar and global stock markets hit a low record on Monday, few hours after the introduction of these highly contentious policies.

Mr. Trump recently signed a number of executive powers that have attracted sharp criticism not only in the United States but also globally.

The first order directs the construction of a multi-billion wall on the US-Mexico border, increasing the number of deportation officers and boosting border patrol forces. The second order, in his view, is to begin the process of rebuilding the armed forces. The third one is basically measures designed to bar radicalized terrorists from 7 Muslim countries from entering the US.

Critics and political analysts say that some of those orders are basically blanket ban for citizens and refugees from Muslim countries and Mexico from coming to the US.

Nonetheless, these immigration curbs have brought feelings of extreme nervousness throughout the global markets with several traders fearful that the move would spark fresh bouts of volatility resulting to destabilization.

Jim Reid, who is a senior strategist at Deutsche Bank also supports the notion that Donald Trump’s victory and his immediate actions are likely to destabilize the dollar and global stock markets.

He said, "while we continue to think that his victory likely translates to higher US growth in the coming years than we would have expected previous years, we still think destabilization and volatility of the country’s economy will be a feature of the coming months."

Mr. Reid also added that, for Donald Trump’s presidency to be smooth contrary to what the majority of the people expect, there must be friendly policies.

The fear of destabilization was confirmed when the FTSE 100 ended the day with 0.9% drop on Monday. Also, major shares across Asia and some countries in Europe also closed the day with a drop.

Japan also received its fair share of destabilization when Nikkei closed the day with around 0.5 per cent lower. For several years now, the yen has remained a relatively safe financial asset to hold whenever there is market uncertainty but this has not been the case after Trump’s orders. For instance, on Monday, the demand for the currency weighed on the Company’s major exporters.

In the United States, stocks fell the most before, during and after the presidential election. However, the impact has been felt most after Trump’s executive orders. For instance, Dow Jones Industrial Average closed below 20,000, more than 200 points in the last week alone. Meanwhile, the S&P 500 experienced a sharp fall of around 1$, with financial and energy leading decliners.

According to reports released by Reuters, the US dollar index recorded a huge drop of around 0.3%, declined around 7$ against the yen early on Monday.

To mitigate the impacts, the US Federal Reserve's policy-setting committee confined a meeting which may people suggest will keep the interest rates unchanged. Traders and investors are watching the situation closely for any clues on how these policymakers will solve the issue.

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