Dollar Nears 4-Year Low: What This Currency Shift Means for Oman Investors and Businesses
SINGAPORE – The U.S. dollar remained near four-year lows on Wednesday after President Donald Trump downplayed its recent decline, intensifying selling pressure on the greenback and boosting the yen, euro, and sterling ahead of the Federal Reserve’s policy announcement.
Currency markets were absorbing heavy dollar selling from the previous session, which pushed the euro above the $1.20 mark for the first time since 2021. The euro later edged down slightly, trading at $1.1994, a 0.36% decrease.
Sterling also eased 0.33% to $1.3796 following a 1.2% rise the previous day, when it reached the highest level since 2021.
The dollar index, which tracks the U.S. currency against six major peers, rose modestly by 0.22% to 96.114 after falling more than 1% in the prior session to a four-year low of 95.566.
On Tuesday, Trump described the dollar’s value as “great” when asked whether it had fallen too far. Traders interpreted this as a cue to accelerate dollar selling.
Although the President’s remarks were consistent with his past statements, they came amid growing pressure on the dollar. This included speculation about a potential coordinated intervention by U.S. and Japanese officials aimed at stabilizing the yen.
Kyle Rodda, senior market analyst at Capital.com, commented, “There is a crisis of confidence in the U.S. dollar. The persistence of Trump’s unpredictable trade, foreign, and economic policies suggests this weakness may continue.”
After falling over 9% in 2025, the dollar has started 2026 with a further decline of approximately 2.3% in January. This reflects investor concerns over Trump’s erratic trade and foreign policy, doubts about the Federal Reserve’s independence, and substantial increases in public spending.
Market attention now centers on the Federal Reserve’s policy decision later Wednesday. The Fed is expected to maintain current rates, continuing a pause that analysts believe could extend beyond Chair Jerome Powell’s final meetings scheduled for March and April.
The upcoming nomination of Powell’s successor in May, efforts by the Trump administration to remove Fed Governor Lisa Cook, and a criminal probe involving Powell all add complexity to this meeting.
Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities in Singapore, said, “Trump’s strategy is clear: run the economy hot through the midterms and stay ahead of the Fed, which seems reluctant to cut rates, by allowing the dollar to weaken. He is effectively greenlighting dollar selling.”
Yen’s Temporary Strength
The fragile Japanese yen gained further from dollar weakness, surging over 1% to a three-month high of 152.10 per dollar on Tuesday before weakening slightly by 0.4% to 152.79 on Wednesday.
This rally followed reports of U.S.-Japan “rate checks,” often a precursor to official currency intervention.
Japanese Finance Minister Satsuki Katayama reiterated on Tuesday that the government would act appropriately in foreign exchange markets if necessary but refrained from commenting on the recent sharp yen appreciation.
Investors remain skeptical about the effectiveness of any intervention, especially as Prime Minister Sanae Takaichi’s snap election campaign—scheduled for February 8—focuses on expanded stimulus measures.
Vaibhav Loomba, head of FX and rates at financial services firm Klay Group, noted, “I believe the authorities have done what they intended. The yen is likely to stay in this range, delaying the 160 level by at least three months, which is an achievement.”
Elsewhere, the Australian dollar rose to $0.70225, its highest since February 2023, buoyed by broad dollar weakness and data showing faster consumer inflation in the December quarter. This has raised expectations for a near-term rate hike from the Reserve Bank of Australia.
The Australian dollar later slipped 0.34% to $0.6987, while the New Zealand dollar declined 0.5% to $0.6015.
Special Analysis by Omanet | Navigate Oman’s Market
The sustained weakness of the U.S. dollar amid geopolitical uncertainty and potential Federal Reserve policy shifts presents both risks and opportunities for businesses in Oman. Exporters could benefit from a relatively stronger Omani rial against the dollar, improving purchasing power for imported goods, while investors should monitor currency volatility closely and consider diversifying assets to hedge against further dollar fluctuations. Smart entrepreneurs should also explore strategic partnerships or financing in alternative currencies as part of risk mitigation in this uncertain global currency environment.
