Trump wants weaker dollar

WASHINGTON/SAN FRANCISCO (Reuters) – President Donald Trump wants a cheaper dollar, saying earlier this month the US should match what he says are efforts by other countries to weaken their own currencies – giving them an unfair trade advantage.

The comments have prompted speculation the president could order sales of the greenback, which is near a multi-decade high and, according to the International Monetary Fund on Wednesday, at least six percent stronger than warranted by economic fundamentals.

“Conditions seem increasingly favorable for the US administration to intervene against perceived (dollar) overvaluation,” Citi economists said in a note Wednesday.

Trump has railed repeatedly against the Federal Reserve for raising interest rates, complaining that the higher rates are holding back US economic growth. But while signs increasingly point to the Fed’s cutting rates when it meets at the end of this month, the lower rates are unlikely to weaken the dollar to a level that Trump wants.

A weaker dollar could help US businesses compete globally by making exports less expensive, boosting the economy and potentially helping Trump’s bid for re-election in 2020.

But a currency intervention could spark pushback from other countries, jeopardize the dollar’s status as the world’s reserve currency and touch off market turmoil. It is also not clear the Trump administration can significantly weaken the dollar without help from the US central bank, which operates independently, or new powers from Congress.