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Opinion
Leonid Bershidsky

Why Trump Is Probably to Blame for the Weak Dollar

According to the Mercury and Mars hypothesis of currency choice, "America First" hurts the American currency.
Worth less these days.

Worth less these days.

Photographer: Sanjit Das/Bloomberg

President Donald Trump keeps bragging about the stock index gains since his election. He did so again on Friday, claiming he'd helped create "six trillion dollars in value." Be that as it may, it's also likely that Trump is at least partially responsible for the dollar's weak performance in 2017, which, from an international perspective, wiped out much of that "value."

Last year, the U.S. dollar lost 10 percent against the euro and 5.5 percent against the renminbi. It was the second worst performer among major currencies after the New Zealand dollar, and its drop was the steepest in more than a decade despite three interest rate hikes and the passage of Trump's tax reform, which could logically be expected to drive the dollar's value upward. This happened for a complex set of reasons which may include the dollar's popularity as a funding tool for foreign companies and governments, but Trumps's effect on his country's global standing must be a key driver of the dollar's decline.