Major currencies including the euro and the pound soared to four-year highs against the US dollar on Tuesday, after President Donald Trump claimed it is doing “great” and suggested he could manipulate the currency.
Investors have been dumping the dollar since Mr Trump returned to the White House last year and imposed global tariffs. The sell-off has only accelerated with the geopolitical uncertainty surrounding his foreign policies, including his threats to take over Greenland.
The greenback's deterioration means it is quickly getting more expensive for expatriates in any country with a dollar-pegged currency to send money home.
The euro rose 1.4 per cent to $1.2049, its highest since June 2021, while a pound was up 1.24 per cent to $1.385. Yet when asked if he was worried about the dollar's decline, Mr Trump seemed unbothered.
“I think the value of the dollar – look at the business we’re doing. The dollar’s doing great,” he told reporters in Iowa. “I want it to be – just seek its own level, which is the fair thing to do.”
He also suggested he could manipulate the strength of the dollar, saying “I could have it go up or go down like a yo-yo.” But he said this was an unfavourable outcome, likening it to hiring unneeded workers to boost employment numbers while criticising Asian economies he said tried to devalue their currencies.
Economist Joseph Brusuelas of RSM said on X that investors are diversifying away from the dollar partly because of the policy uncertainty from Washington.
Mr Brusuelas said de-dollarisation of the global economy is happening at a slow pace, but that could change.
“It's a little like what happened to Mike Campbell, the protagonist in Hemingway's The Sun Also Rises, when asked how he went bankrupt: gradually and then suddenly,” he wrote.
Mr Trump last year said a strong US dollar “sounds good”, but promoted reasons as to why a weaker greenback is better for the American economy, including boosting tourism.
The US, Canada and Mexico are hosting this year's World Cup.
