Investors haven’t adequately accounted for the possibility the Trump Administration will take an active role in the currency market, according to a veteran U.S. policy analyst.

“Markets undervalue Trump trade currency activism, both because they disbelieve it as being ahistorical and because they can’t value its likely impact,” said Kevin Nealer, a principal with the Washington-based Scowcroft Group.

Among the warning signs Nealer points to are President Donald Trump’s own persistent accusations of exchange-rate manipulation by U.S. trade partners and the creation of a remedy for trade grievances that’s linked to assessments of currency undervaluation.

Together with “unparalleled” attacks on the Federal Reserve, there are the “means, motive and opportunity” for potential currency activism, Nealer said in emailed comments.

Nealer, who specializes in financial services and trade policy issues, highlighted that the government can initiate most trade cases itself, even if American companies themselves refrain from filing trade-grievance cases with the government.

While Trump himself hasn’t said he’ll intervene to drive down the dollar, debate inside the administration has helped stoke such speculation.

Nealer, who served on President Barack Obama’s Intelligence Advisory Board and previously worked at the State Department, worries more broadly about a lack of veteran personnel to execute policy and coordinate with other countries.

By his count, there’s been a record turnover of 75% of “senior U.S. policy makers, coupled with a conscious choice to hollow out the government by not appointing career or political professionals to many mid-level jobs.” That’s reduced “habits of cooperation with foreign partners and diminished U.S. capacity to deal with any crisis,” he said.

An economic shock, military emergency or even natural disaster or pandemic could see an “underwhelming” response from the U.S. because of such personnel challenges, Nealer said.

And the trade war could leave the world’s two largest economies failing to coordinate in the case of a global meltdown. That’s a big change from the “soft cooperation” China provided during the 1997-98 Asian financial crisis and the 2007-09 credit crisis, according to Nealer.

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