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Dollar plunges after Trump, Navarro signal push to weaken greenback

Dan Kitwood | Getty Images

The U.S. dollar tumbled against key rivals on Tuesday and was on course for its worst month since March after U.S. President Donald Trump commented on currency devaluation by other countries and his trade adviser remarked on the euro.

Trump, in a meeting with the chief executives of several top drugmakers on Tuesday, said drug companies had outsourced production because of currency devaluation by other countries.

The comments intensified expectations that the new U.S. administration was making moves to talk down the greenback just hours after Trump's top trade adviser, Peter Navarro, told the Financial Times that Germany is using a "grossly undervalued" euro to gain advantage over the United States and its own European Union partners.

"Markets are just continuing to react to rhetoric from President Trump and others in the administration pushing back against the strength in the dollar," said Vassili Serebriakov, a currency strategist at Credit Agricole in New York.

The dollar plunged by around 1 percent against the Japanese yen after the comments, hitting its lowest since Nov. 30 of 112.07 yen. The euro gained 1 percent against the dollar to $1.0795, after hitting its highest since Dec. 8.

The dollar index, which measures the greenback against a basket of six major rivals, also hit its lowest since Dec. 8 of 99.462 and was set to decline 2.5 percent for the month.

Navarro's words followed recent comments by both the president and his Treasury secretary nominee, Steven Mnuchin, on the strength of the dollar in relation to other trade partners in recent weeks.

Trump said in an interview with the Wall Street Journal earlier this month that he thought the dollar was too strong and "it's killing us."

"(Trump) is doing more than enough to create uncertainty and turmoil and with uncertainty and turmoil you usually see a flight away from the assets of where that turmoil is coming from," said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago, in reference to the weaker dollar.

The dollar index was last down 0.88 percent at 99.55.