Trump thinks a weaker dollar is great, but the U.S. needs a stable currency as national debt heads toward $40 trillion, former Fed president says

President Donald Trump welcomed the dollar’s recent decline, but a former Federal Reserve president said the astronomical size of U.S. debt requires more stability for the currency.

The U.S. dollar index has plunged 10% over the last year and 1.2% this month alone. That’s after Trump shocked global market last spring with his “Liberation Day” tariffs, while concerns about ballooning debt, central bank independence, and a schism with European allies have weighed on the greenback more recently.

“I think it’s great,” Trump said on Tuesday about the dollar’s drop. “Look at the business we’re doing. The dollar’s doing great.”

The currency later rebounded somewhat after Treasury Secretary Scott Bessent reaffirmed that the U.S. has a strong dollar policy and denied rumors of an intervention to prop up the yen.

Former Dallas Fed President Robert Kaplan attributed the dollar’s recent slump to investors buying some tail-risk protection by hedging the currency. He also noted that demand for U.S. stocks remains high, contradicting fears of a “sell America” trade.

“Yes, it is true a weaker dollar boosts exports,” Kaplan told Bloomberg TV on Tuesday. “However, we...