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Trump wants a weaker dollar – here's why



President Trump recently pushed back to the European Central Bank and claimed that the European block unjustifiably competed against the United States by deflating the value of the euro, although the US dollar remains relatively strong.

"Mario Draghi has just announced that more stimulus could come, which immediately dropped the euro against the dollar, making it impossible for them to compete against the United States," Trump wrote in a tweet. "They've gone away with this for years with China and others."

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Earlier in the day, Draghi said the ECB was ready to cut interest rates if the economy needed it. Draghi said during a speech in Portugal that "further cuts in interest rates … remain part of our tools." His comments sent stocks higher and dragged the euro against the US dollar.

But why does the President think that a weaker dollar is better for the economy?

Important, if the US dollar is worth less than other currencies, foreign countries will likely buy more US goods ̵

1; increasing things like US production while helping to close the trade deficit. Trump often accused China of keeping its currency, the yuan, deliberately low in order to make exports cheaper and therefore increasing the trade imbalance.

Currently, the yuan is a seven-dollar conversion rate over the US dollar.

And since Trump has joined, the dollar has been strong – much to his dissatisfaction – thanks to protectionist trade policies, a major fiscal stimulus from the 2017 tax cuts and the Jobs Act and the Federal Reserve interest rate hikes (which Trump has usually pushed to lower rates) .

"I want a strong dollar, but I want a dollar that makes it good for our country, not a dollar that is so strong that it makes it impossible for us to do business with other nations and take their business, "said Trump during a speech in March before launching criticism of Fed Chairman Jerome Powell.

"We have a gentleman who likes a very strong dollar in the Fed," he added, referring to Powell.

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On Thursday, after US central bank politicians signaled that they would lower interest rates as soon as 2020 (if not earlier), the dollar weakened against other major currencies.


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