Plaza Accord 2.0 is coming? Citigroup predicts that the US dollar will start a devaluation channel after the G7 meeting.

Citigroup Group said that the US dollar may further weaken after the G7 meeting this week, as global leaders will discuss exchange rate policies as part of their negotiations with the United States on trade. In a report, led by Osamu Takashima, a currency strategist at the Bank of Japan, wrote that Washington is unlikely to actively pursue a weak dollar, but as the US reaches agreements with its trading partners to lower tariffs, the dollar will eventually depreciate. Before the start of the G7 meeting on Tuesday, exchange rate policies have become a focus. Officials from South Korea and Taiwan, China have hinted at discussions with the United States on this issue. The Japanese Finance Minister said earlier on Tuesday that he was arranging a bilateral meeting with US Treasury Secretary Benson this week to discuss issues including exchange rate issues. Citigroup strategists wrote, "We suspect that a currency appreciation may be requested as part of negotiations to lower tariffs," and added that Japan, China, and other East Asian countries may be targets. "We suspect that the Bank of Japan's monetary policy is being discussed behind the scenes in US-Japan trade negotiations." Citigroup expects that Benson will not seek an agreement similar to the Plaza Accord of 1985, which comprehensively suppressed the US dollar, but will emphasize the role of central banks in exchange rate issues. They stated that Benson may also focus on the impact of foreign exchange reserve investment policies on US interest rates. "We do believe that the risk of dollar depreciation is rising," the strategists said. "As high tariffs are removed, the momentum for the US to maintain a strong dollar policy will weaken," they added. Since the announcement of high tariffs in early April and the resulting global market turmoil, the Bloomberg US Dollar Spot Index has fallen by 4%. Subsequent chaotic implementation processes and uncertainty about the persistence of tariffs have raised doubts about US policy, damaging confidence in the dollar and other US assets.