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Civic Register
| 1.25.18

Countable Explains: What’s a ‘Weak Dollar’?

What’s the story?

Speaking at a press conference at the World Economic Forum in Davos Wednesday, U.S. Treasury Secretary Steven Mnuchin said:

"A weaker dollar is good for us as it relates to trade and opportunities."

What’s a ‘Weak Dollar’?

Basically, a weak dollar means that the U.S. dollar exchanges for fewer amounts of foreign currency. When you exchange dollars for, say, pesos, you’re "selling" your dollars and “buying” pesos.

Investopedia provided this example:

"The exchange rate between the U.S. and Canada has hovered between 0.7292 CAD/USD and 1.0252 CAD/USD. If the current exchange rate is at 0.7400 CAD/USD, the American dollar would be considered weak and the Canadian dollar strong."

Since President Donald Trump took office, the U.S. dollar has declined by 10 percent. Following Mnuchin’s comments, it dipped to a session low.

Is the U.S. Dollar Weak?

Depends who you ask.

White House spokeswoman Sarah Huckabee Sanders responded to Mnuchin’s claim, telling reporters:

"Currently we have a very stable dollar because of how well the U.S. is doing, and it’s as powerful as it’s ever been. We believe in free-floating currency. The president has always believed in that."

And after making his initial comments, Mnuchin continued:

"Longer term, the strength of the dollar is a reflection of the strength of the U.S. economy and the fact that it is and will continue to be the primary currency in terms of the reserve currency."

The following day, Mnuchin said:

What do you think?

Should the U.S. dollar be a concern of the Treasury Secretary? Do you believe in a "free-floating currency"? Have you traveled to other countries and been affected by the weakened dollar? Hit Take Action and tell your reps, then share your thoughts below.

—Josh Herman

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(Photo Credit: ImagePixel / iStock)