Donald Trump Welcomes US Dollar Plunge to Four-Year Low

The US dollar plummeted to its lowest levels since early 2022 in late January 2026, with the index dropping to 95.566. Donald Trump triggered a steep decline on January 27 after telling reporters in Iowa that the currency's value was "great" and should "just seek its own level." This signaled a departure from traditional strong-dollar policy, as Trump aimed to make American exports more competitive and encourage the reshoring of manufacturing.

The currency's slide was compounded by speculation of coordinated devaluation with Japan, following reports that the New York Federal Reserve conducted rate checks. Additional volatility stemmed from Trump's threats of 100% tariffs on Canada and disputes over Greenland. Market instability was further heightened by the risk of a government shutdown following political fallout from incidents in Minneapolis. These factors pushed gold prices to record highs exceeding $5,000 per ounce.

Treasury Secretary Scott Bessent repeatedly attempted to stabilize markets by asserting that the U.S. maintains a "strong dollar policy" and denying any active intervention in the USD/JPY pair. Simultaneously, Federal Reserve Chair Jerome Powell held interest rates steady at 3.5%-3.75% on January 29, despite pressure from Trump and dissenting votes from Governors who favored a rate cut. While the weaker dollar may benefit large U.S. companies with significant overseas sales, analysts warned it could destabilize $27 trillion in foreign-held assets and fuel imported inflation.