U.S. President Donald Trump has dismissed concerns that the value of the U.S. dollar has declined too much, arguing instead that the currency has been doing “great.”
Asked by a reporter whether he was worried about the dollar’s recent losses, Trump replied: “No, I think it’s great.”
He pointed to the business the United States was doing, without providing further details.
The remarks prompted a swift market reaction, with the euro rising above 1.20 dollars against the dollar.
Gold also gained strongly against the U.S. currency, hitting a record high.
Trump cited China and Japan as examples. “If you look at China and Japan, I used to fight like hell with them, because they always wanted to devalue,” he said.
This, however, is more likely the result of differing economic conditions and interest-rate policies.
Trump has previously spoken openly in favour of a weaker dollar, arguing that it could create opportunities for stronger economic growth.
With a strong dollar, business could not be done and foreign tourists would stop coming to the U.S., he said.
At the same time, Trump acknowledged that a strong dollar helps to curb inflation.
In general, a weaker dollar can stimulate demand from abroad, leading to higher exports in the short term and supporting economic growth.
Excessive currency weakness, however, can complicate efforts to tackle inflation, as it raises the cost of imported goods for U.S. consumers and makes overseas travel more expensive.