Jan. 29 at 8:56 PM
The U.S. dollar’s recent decline—down 2.1% this month after a 9% drop last year—could create inflationary pressures, posing challenges for both President Trump and the incoming Federal Reserve chair. While Trump has historically favored a weaker dollar to boost exports and trade, excessive depreciation could increase import costs and push inflation higher.
U.S. manufacturers like Caterpillar benefit from a weaker dollar as overseas revenues convert to more dollars, while tech firms such as Nvidia and Micron face similar dynamics. However, higher import prices risk eroding consumer affordability, potentially hurting the Republican Party ahead of midterm elections.
Fed Chair Jerome Powell emphasized that currency oversight is the Treasury’s responsibility, but rising inflation could force the Fed to raise rates, indirectly supporting the dollar. Analysts warn the new Fed chair may face a difficult balancing act between controlling inflation and supporting economic growth.
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