When the question is asked, US President Donald Trump usually claims that he wants to pursue a policy that gives a strong dollar. This is because he sees a strong dollar as a sign that the US economy is strong.
But his dollar strategy in practice goes against this – which is evident from the dollar's fall against the krona by over 10 percent since the peaks in January.
I think he would rather have lower interest rates and a weaker dollar, if it can help the American economy, says Amanda Sundström.
Trying to make the dollar weaker
She thinks that after the turbulent start to Trump's second term – with sudden turns in tariffs and geopolitics – it's hard to say what the US President actually wants to achieve when it comes to the dollar.
But the policy pursued by the Trump administration is aimed at trying to make the dollar weaker, she says.
Trump's currently paused 25-percent tariffs against Canada and Mexico hit hard against the neighboring countries' currencies when they were presented. But they have recovered.
At the same time, European currencies have risen broadly against the dollar. This is since Trump's sudden turns in the Ukraine war and attitude towards Russia have pressed for decisions that pave the way for enormous investments in defense and infrastructure in Europe.
The tariffs are intended, according to the Trump administration, to strengthen the US treasury and thereby create room for tax cuts in the US. The idea is also that it should force global companies to invest in production in the US.
But whether this will be the result is hard to say, says Sundström.
Wants lower long-term interest rates
SEB colleague Elisabet Kopelman interprets Trump's policy so far since taking office as having backed away from the line of a strong dollar.
They still want the dollar to be a global reserve currency, but it can be a weak reserve currency, says Kopelman.
There is an ambition within the Trump administration to see a weaker dollar, as support for exports, she adds.
Another side of the coin is long-term American market interest rates. The Trump administration wants to push them down – and when they fall, the dollar normally falls with them.
Trump wants to have lower interest rates. It's an explicit goal from the Trump administration. And you have to say that he has succeeded in achieving it in recent months, says Sundström.
