Dollar plunges after Trump comments, marking biggest drop since last April

• Trump declined to express concern about the dollar's weakness, stating 'I think it's great' and referencing how China and Japan historically wanted to devalue their currencies to compete
• The dollar index, which tracks the U.S. currency against six major trading partners, fell as much as it did on April 10, 2025, when it dropped nearly 2% amid trade disputes and threats of 145% tariffs on China
• On that previous April 10 decline, the S&P 500 fell 3.5% and the Nasdaq Composite sank 4.3%, highlighting the market impact of sharp dollar movements

Market Summary: Dollar Plunges on Trump Comments

Key Developments

The U.S. dollar plummeted 1.3% on Tuesday, marking its steepest single-day decline since April 10, 2025, and touching its lowest level since February 2022. The selloff was triggered by President Donald Trump's unexpected endorsement of a weaker dollar during an Iowa visit.

Trump's Statement

When asked whether the dollar had fallen too much after sliding 10% over the past year, Trump responded positively, saying "I think it's great" and "the dollar is doing great." He drew comparisons to China and Japan's historical currency devaluation strategies, suggesting a weaker dollar improves U.S. competitiveness. Trump referenced past battles with these nations over their efforts to devalue the yen and yuan to gain trade advantages.

Market Impact

The dollar index, which measures the greenback against six major trading partners (excluding China), experienced its worst performance since April 10, 2025. That previous decline of nearly 2% coincided with escalating trade tensions, including threats of a 145% tariff on China, and triggered significant equity market losses—the S&P 500 fell 3.5% and the Nasdaq Composite dropped 4.3% on that date.

Implications

Trump's comments signal a potential shift in U.S. currency policy, favoring a weaker dollar to boost export competitiveness despite the currency's 10% decline over the past year. This departure from traditional strong-dollar rhetoric could have significant implications for international trade, inflation, and foreign investment flows. The President's Iowa appearance was aimed at promoting his economic record.