US Dollar Strengthens as Washington Eases Huawei Crackdown
The US dollar strengthened on Tuesday after Washington revised its Monday decision to ban U.S. companies from selling to Huawei. The telecom giant’s products are already banned from use in networks in the United States due to national security issues.
US-China Trade Battle Moves to Tech
The US-China trade war has been going on for over a year now, and it has had unpleasant effects on the world’s economy. Some feel that this is more than matter of trade, and, in fact, is more about two different world views trying to gain dominance.
Unsurprisingly, the trade war has now moved into the sphere of technology. Technology has now become the key driver of a country’s wealth and prosperity, as well as their economic and military security.
As China and the U.S. try to outdo each other in becoming a tech leader, it’s not surprising that Washington targeted Huawei.
The telecom giant has been at the center of scandal for some time. A number of countries, including the United States, are worried that Huawei products pose security issues. Essentially, Huawei is accused of spying for the Chinese government through its products, a fact that the company firmly denies.
The company’s founder, Ren Zhengfei was quite adamant in an interview with the BBC in February, stating his company would never get involved in anything to do with spying.
The founder’s daughter was arrested in Canada at the end of December 2018, which only exacerbated the whole situation. The arrest was related to accusations that Huawei was violating sanctions against Iran.
In March, Huawei filed a lawsuit against the U.S. government for banning federal agencies from using their products. This lawsuit was part of the company’s larger PR endeavor to convince the wider populace that their products are safe and do not pose a threat to any country’s national security.
Unfortunately for Huawei, despite their belief that they can handle the backlash, public opinion all over the world has turned against the company. Many consumers have become wary of buying Huawei phones.
Washington Placed Even More Restrictions on Huawei
On Monday, Washington banned U.S. companies from selling to Huawei, which resulted in significant volatility in the markets. On Tuesday, however, the U.S. Commerce Department stated that, in certain cases, U.S. companies would receive a temporary exemption from the decision.
The announcement led to the U.S. dollar hitting a three-week high, as well as a slight rally in European stock markets.
However, Ren Zhengfei predicts that the trouble is not over. He stated that sacrifices have been made for the company to reach its ultimate objective to “stand on top of the world.” He feels that due to their determination and how close they are to achieving this goal, conflict with the United States is inevitable.
The EUR/USD slipped by 0.2% to trade at $1.1149, while semiconductor company shares in Europe recovered from their 4.5-month low, with the technology index rising by 1%, thus recovering a little from its Monday loss of 2.8%.
The GBP/USD also slipped by 0.2%, reaching a 4-month low of $1.2703, which was in large part the result of continued Brexit turmoil. The Conservative Party stated they plan to stop the next Prime Minister from taking the U.K. out of the European Union with no transitional agreements.