Trump Says "Dollar Is Doing Very Well"... Signals Tolerance for Weak Dollar

Dollar Index Plunges After Trump’s Remarks
U.S. Authorities Expected to Step Up Currency Intervention

On the 27th (local time), Donald Trump, President of the United States, visited Iowa and gave a speech. Photo by AP News Agency

As President Donald Trump stated that he was "not concerned" about the decline in the value of the US dollar, the currency plunged to its lowest level in four years. In the foreign exchange market, there is growing anticipation that the Trump administration will continue its weak dollar policy.

At a press conference during his visit to Iowa on the 27th (local time), President Trump responded to a question about the dollar's depreciation by saying, "I think it's great. Look at the business we are doing. The dollar is doing very well." He added, "I want to let the dollar find its own level. That is the fair way."

He stated, "China and Japan have always tried to devalue their currencies. They have continuously attempted to lower the yen and the yuan," he said. "It is unfair because it makes competition extremely difficult when currencies are devalued." He pointed out that the artificial exchange rate policies of both China and Japan have made it relatively difficult for American products to remain price competitive.

Immediately after President Trump's remarks, the value of the dollar plummeted. The Dollar Index (DXY), which measures the value of the dollar against six major currencies, fell 1.3% from the previous session to 95.78 right after President Trump's comments. This is the lowest level since February 2022.

There are growing expectations in the market that the Trump administration will take more aggressive action to intervene in the foreign exchange market. Earlier, on the 23rd, news emerged that the Federal Reserve Bank of New York had conducted a "rate check" to assess the yen exchange rate level among market participants including investment banks. This has led the foreign exchange market to believe that US authorities are set to step up their intervention.

Jonas Goltermann, an economist at Capital Economics, stated in a report on the 27th, "There could be several reasons for the dollar's decline, but the main factor at present is the impact of news that the US Treasury is considering direct intervention in the foreign exchange market."