At a campaign rally in Iowa, President Donald Trump said he could make the dollar rise or fall like a yo‑yo. Commenting on the currency’s sharp decline, he insisted that everything is fine with the dollar and said he hoped the currency had simply found its fair level. The remarks had the opposite effect. After his speech, the Bloomberg dollar index fell a further 1.2%, and the US currency weakened against all major peers.
Analysts said several factors underlie the dollar’s weakness. Markets are pricing in further Federal Reserve rate cuts, rising uncertainty over tariff policy, and instability in the president’s policies, including threats to the Fed’s independence.
These factors have dented investor confidence. A growing budget deficit adds to the concerns. Win Tin, chief economist at Bank of Nassau, said many in the Trump administration favor a weaker dollar to boost export competitiveness but warned that such a policy is a calculated risk that could spiral out of control.
Traders reacted quickly to the president’s comments. Short bets on the US dollar reached record levels. A reward for short‑dated options that profit from currency weakness climbed to its highest point since 2011, the earliest year for which Bloomberg has comparable data. Given the sharp slide, some experts now forecast the dollar could fall to its lowest level in four years, reflecting a marked shift in investor expectations for the currency’s long‑run path.