Trump: 'Lots of bad things happen with a strong dollar'

Key Points
  • In a break with the traditional practice of other presidents, Trump lately has been vocal about his desire for a weaker currency.
  • Trump has gotten his wish so far this year, with the dollar down about 9 percent against its global competitors.
  • Trump also has changed his tune about Fed Chair Janet Yellen, telling the Wall Street Journal she has done "a good job."
Why the dollar is languishing
Why the dollar is languishing

President Donald Trump is continuing to bang the drum against a strong dollar, telling journalists recently that a powerful U.S. currency is not his preference.

In a break with the traditional practice of presidents not commenting on the greenback, Trump lately has been vocal about his desire for a weaker currency.

An interview last week with The Wall Street Journal helped magnify where Trump stands.

"I like a dollar that's not too strong," he said, according to an interview transcript of the Journal interview that Politico posted Tuesday. "I mean, I've seen strong dollars. And frankly, other than the fact that it sounds good, lots of bad things happen with a strong dollar."

So far this year, Trump has gotten what he wanted.

The dollar has plummeted against a basket of its global competitors, falling more than 9 percent on the year in what has been a pretty consistent downward spiral.

That wasn't the way currency traders saw the year transpiring.

Immediately after Trump's surprise victory Nov. 8, the dollar quickly jumped in value, with the dollar index rising about 6.5 percent from shortly before the election to its peak just ahead of the new year. The belief then was that a debt-fueled spending binge coupled with protectionist trade policies would boost the dollar's value. The president also at times had been a supporter of a strong greenback.

However, since then the dynamic has changed. Trump's pro-business agenda has stalled in Congress and he has softened his rhetoric on global trade agreements.

The dollar index fell to a 15-month low on Wednesday.

A strong U.S. currency gives Americans more purchasing power. However, it also makes U.S.-produced goods more expensive in global markets. About 43 percent of S&P 500 revenue is derived from international sales, according to S&P Dow Jones Indices.

The Journal interview also highlighted some change of heart he's had toward Janet Yellen, the chair of the Federal Reserve, whose policies help determine the direction of interest rates and generally influence the dollar's trajectory.

Donald Trump
Andrew Harrer | Bloomberg | Getty Images

Even though the Fed has approved three rate hikes since the election, the dollar has fallen and government bond yields have remained low as well.

During the campaign, Trump said Yellen should be "ashamed" of her actions, which he said helped prop up the economy under President Barack Obama. In the Journal interview, he changed gears and said the central bank chief has done "a good job."

Trump, however, declined to reveal whether he would reappoint Yellen when her term expires in February. Various names have been floated as her successor, among them Gary Cohn, the former Goldman Sachs executive who now is the president's chief economic advisor.

Trump said Cohn "certainly would be in the mix" though he said others are being considered as well.

With the dollar in its weakest position since last summer, traders discuss whether it can make a comeback.

Dollar hovers near 14-month low
Dollar hovers near 14-month low