Finance expert Paul Gambles warned that global economic growth could soon be disturbed by a rebound of the US dollar, which was sparked after by fears of a trade war between the US and China.
Paul Gambles, managing partner at Thailand-based advisory firm MBMG Group, warned the dollar has shown signs of “forming a bottom”.
Speaking on CNBC, he said: “I think the key point is the American economy and actually the global economy was predicated on the dollar continuing to fall… So, actually, even a 1 or 2 percent appreciation is quite dangerous.”
He added: “If we are forming a bottom right now in dollar, which it looks like we have been doing since the end of January, then that’s a real big threat to the global economy and global capital markets as well.”
Donald Trump has proposed tariffs on $60bn worth of Chinese goods in an effort to cut the trade deficit with China.
Mr Trump wrote on Twitter: “When a country (USA) is losing many billions of dollars in trade with virtually every country it does business with, trade wars are good and easy to win.
“Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!”
China has retaliated to Donald Trump’s threatened trade tariffs by announcing a $50billion reciprocal tariff on US goods.
China will impose additional tariffs of 25 percent on 106 US goods including soybeans, autos, chemicals, some types of aircraft and corn products, among other agricultural goods, the finance ministry said on Wednesday.
Every blue-chip company in the Dow Jones had fallen into the red at the start of trading on Wednesday amid fears of a trade war.
Chris Anstey, Managing Editor of Asia Cross-Asset Markets, tweeted: “If I had to characterise it, we’re going from a light skirmish to a heavy skirmish.
“For me a trade war would have to be something that would drag down the economic aggregates — dragging down export numbers, ultimately dragging down GDP numbers.”
US stocks, however, surged on Thursday as global markets continue a rally that began late on Wednesday.
The S&P 500 climbed 1 percent to 2,669 and the Dow Jones industrial average rose by 1.3 percent, to 24,588.