From time to time, governments consider it beneficial to have a weaker currency to increase exports as products will become cheaper for the receiving country allowing them to purchase more. However, such a tactic sets competing businesses in the home countries at a disadvantage, thus many economists and world leaders frown on the financial maneuver as it is seen as an attempt by the exporting country to gain an unfair advantage over the competition in the receiving country.
American exporters exceeded economists’ expectations in December and hit one and a half year highs as it outpaced the growth in imports, lowering the total monthly trade deficit by 3.2% to $44.3B – however the deficit did increase over a yearly basis for 2016. As part of his plan to spur economic growth in America, increasing exports will be a key part on the process according to Trump and his appointed officials that have spoken on the issue.
The US dollar is on track for a bad month as President Trump expressed his opinion on other countries devaluing their currencies – with his trade adviser specifically attacking the euro.
© Dynamic Capital
