Love a weak dollar

Why investors love a weak dollar (for now)

“You make a hell of a lot more money with a weaker dollar,” said President Trump.

By Sam Sutton and Victoria Guida

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The dollar has fallen by about 8 percent since Donald Trump took office. Setting aside whatever that may say about investor confidence in U.S. trade policies or fiscal deficits, it has been pretty great for stocks.

“It’s truly a sugar rush,” said Mark Hackett, chief market strategist at Nationwide.

If you’re a multinational business, “you love a weaker dollar,” he said. “Not only does it [help] you compete globally, but you also get this immediate sugar rush from translating foreign earnings back into your income statement.”

Put another way, if U.S. companies simply maintained prices on products they sell abroad, the greenback’s decline has enabled them to repatriate the proceeds of foreign sales made with local currencies into more dollars than they would have had the same transaction occurred before Trump’s inauguration.

That’s music to the ears of Trump, who has said he wants “not a weak dollar, but a weaker dollar.” That’s why he and his administration aren’t leaning against this trend.

“You make a hell of a lot more money with a weaker dollar,” he told reporters recently. “When you have a strong dollar, you can’t sell anything. It’s only good for inflation, and it’s good psychologically. It makes you feel good.”

As Trump suggests, companies that generate a lot of foreign revenue — including tech powerhouses that help drive the stock market’s overall performance — are seeing real gains from these currency moves. The 100 largest companies listed on the tech-heavy Nasdaq exchange generate about 45 percent of their revenue abroad, according to Goldman Sachs. For companies on the S&P 500, non-U.S. sales represent a hefty 28 percent of revenue.

Last week, Netflix Chief Financial Officer Spencer Neumann told analysts that the softer dollar was a factor in the streaming service’s decision to raise its full-year earnings forecast. Mark Zuckerberg’s Meta has also lifted its third-quarter projections thanks in part to a currency-related boost.

“It’s particularly good for service exporters,” said Kenneth Rogoff, a Harvard professor and former chief economist at the International Monetary Fund who has written extensively about the dollar. “In some sense, that’s what Big Tech is.”

In other words, the president is getting the Secret Deodorant currency he’s always desired: soft enough for companies to bank profits overseas, strong enough to preserve its status as a primary currency for central bank reserves and cross-border transactions.

But policies out of Washington might not be able to sustain this equilibrium.

If the same factors that influenced the dollar’s recent decline — such as the often confusing direction of U.S. policy — fester, the result could be more inflation as consumer purchasing power degrades.

Uncertainty about trade arrangements, after all, is far from over; despite Trump’s recent trade agreements with the European Union and Japan, he still has an itchy trigger finger when it comes to raising taxes on allies like India. And ever-increasing tariffs could encourage the drift of capital to other markets, boosting U.S. export prospects but weakening the dollar further.

If prices start to surge, it could force the Federal Reserve to keep rates higher for longer. Investors “are missing not even the long-term, but medium-term cost of tariffs, which are going to come sooner than they are pricing it,” said Josh Lipsky, senior director of the Atlantic Council’s GeoEconomics Center.

On the flip side, if bigger profit margins push up domestic stocks — particularly tech giants that are spending heavily on powerful artificial intelligence capabilities — it could reinforce investor notions that the U.S. economy and financial markets will continue to dominate, Steve Englander, head of global G10 FX research and North American macro strategy at Standard Chartered Bank, told POLITICO. That’s good for the dollar and could potentially reverse some of the sugar high.

Notably, the Treasury Department isn’t endorsing a weak dollar, though they don’t mind the downward drift. Joseph Lavorgna, who serves as counselor to Treasury Secretary Scott Bessent, said the dollar is still strong despite having dropped relative to other currencies, particularly the euro.

“The real broad trade-weighted dollar was very high, and it has weakened off of near-record levels,” he said.

He said preserving the country’s reserve currency status, and Treasury securities’ central role in global markets, is key to the department’s approach. Otherwise, “the ultimate goal is just to produce a strong economy that lifts wages across the board with inflation moderating.”

In the meantime, if a slightly weaker dollar continues to help earnings and share prices for blue chip U.S. companies? The administration will take it.