President Donald Trump indicated he was pleased with the dollar’s recent slide, which helped push the currency to its lowest level since early 2022, according to Bloomberg.
“No, I think it’s great,” Trump told reporters in Iowa on Tuesday when asked if he was concerned about the currency’s decline. “I think the value of the dollar … look at the business we’re doing. The dollar is doing great.”
Trump’s comments have already fueled the dollar’s deepest slide since the introduction of tariffs that sent markets into a downward spiral last year, stoking fears that his erratic monetary policy changes would cause foreign investors to pull out of the US.
After he spoke, the Bloomberg Dollar Spot index extended losses to as much as 1.2 percent, with the U.S. currency weakening against all its major counterparts before settling somewhat in Asian trade on Wednesday.
The president has long accused other countries of chasing weaker exchange rates to boost exports, and Treasury Secretary Scott Bessent has emphasized the distinction between the dollar’s price and its value as a reserve currency. So these latest comments were perceived as a green wave date Trader to sell the US dollar.
“Many in the Trump cabinet want a weaker dollar to make exports more competitive,” said Win Thin, chief economist at Bank of Nassau. They are “taking a calculated risk. A weaker currency can be beneficial until things get messy.”
Part of the dollar’s decline was caused by the yen’s sharp rally last week as traders braced for possible intervention by Japanese officials to support the currency.
But the dollar’s slide has also been fueled by Trump’s unpredictable policies that have rattled allies and overseas investors: his threats to seize Greenland; pressure on the Federal Reserve; the tax cuts that deepened the deficit; and a leadership style that has deepened US political polarization.
The weakness came despite a rise in government bond yields and expectations that the Fed is poised to end its interest rate cuts at its meeting this week – both traditionally seen as supportive of the currency. Indeed, Trump has been vocal about wanting interest rates much lower, which would hurt the dollar even more.
This pushed investors to rival stores of value such as gold, sending bullion to record highs. They are also pouring cash into assets such as emerging market funds at a record pace as momentum builds for a broader rotation of activelor American, a move some have called “discreet abandonment.”
“Today’s move in the dollar may seem exaggerated, given that interest rate differentials remain in its favor over many of its competitors. But President Trump’s remarks underscore the lingering risks that will continue to weigh on the currency and encourage investors to seek shelter elsewhere,” explained Tatiana Darie, macroeconomic strategist.
For years, Trump has had mixed views on the dollar, extolling its strength as a way to keep an edge in bilateral negotiations while talking about the benefits of a weak dollar for the manufacturing sector. “I’m the kind of person who likes a strong dollar but a weak dollar makes you a lot more money,” he said last year.
However, any prolonged weakening of the dollar could bring with it a number of dangers for the US economy.
“It’s true, a weaker dollar boosts exports. However, the United States has a debt of $39 trillion on its way to over $40 trillion, and when you have that much debt, I think currency stability probably trumps exports,” Robert Kaplan, vice president at Goldman Sachs Group Inc., said in an interview with Bloomberg Television.
“I actually think the US will want to see a stable dollar and they want to see stability. They want to be able to sell the long end of the Treasury bond curve: a stable dollar helps,” he said.
Since Trump’s inauguration, Bloomberg’s estimate of the U.S. currency has fallen nearly 10 percent, and traders are betting on further losses.
Trump suggested on Tuesday that he could manipulate the dollar’s strength, saying, “I could make it go up or down like a yo-yo.” But he presented this as an unfavorable outcome by comparisonul with hiring unwanted workers to boost jobs and criticized Asian economies that, he said, tried to devalue their currencies.
“If you look at China and Japan, I used to fight them because they always wanted to devalue their yen. KnowÞi this? The yen and the yuan, and they always wanted to devalue it. It’s being devalued, it’s being devalued, it’s being devalued,” Trump said on Tuesday.
“And I said, it’s not fair to devalue, because it’s hard to compete when they devalue. But they always fought, no, our dollar is great,” he added he.
Editor: Ş.R.
