In recent weeks, the dollar has fallen against most other currencies, but President Trump appears little disturbed.

Since Inauguration Day, its trade weighted value has slipped 8.5% and 1.9% this year.

This defies economic fundamentals.

Since 2016, the U.S. economy has grown 2.5% annually and is expected to continue outperforming other advanced industrialized economies.

A currency should rise when its government imposes tariffs by reducing the supply offered in foreign exchange markets to purchase imports.

Since the 1985 Plaza Accord, when the advanced industrialized countries abandoned the Bretton Woods system of fixed exchange rates against the dollar, supply and demand in markets that enable international trade and capital flows have determined currency values.

Despite all the hand ringing, the dollar still stands at the center of the system—the share of international transactions going through the dollar rose to 89% in 2025.

The dollar’s share of foreign central bank currency reserves has slipped to just below 58% as the system accommodates China’s growing share of global trade and prominence in manufacturing. But the same is true for other major currencies.

The reasons are simple.

The U.S. banks, through the U.S.-controlled SWIFT messaging system in Brussels and their robust currency trading desks, provide clean and efficient markets for trading currencies.

VISA and Mastercard hold a 90% market share for payment cards in Europe.

That makes the dollar a convenient place to invest—a cushion abroad for individual and institutional investors against domestic inflation and instability. U.S. stock markets offer the widest array of choices for equity investors.

As international businesses must access dollars to execute cross-board payments, corporate treasuries hold dollars and U.S. Treasury securities.

These make a ready market for U.S. government and corporate debt.

Treasury Secretary Bessent asserted the United States still has a strong dollar policy after Trump’s provocative comments ignited a frenzy of speculation that Mr. Trump may want a debasement strategy.

That is accept a weaker dollar to boost U.S. manufacturing with the accompanying inflation reducing the real value of the national debt and the interest burden it imposes on federal finances.

Other than Social Security, interest payments now exceed all major categories of federal non-military spending, and are approximately the same as spending for National Defense.

However, a weaker dollar won’t play well with voters. It makes foreign travel more expensive and drives up prices.

More likely, his recent comments were a way to deflect criticism about the fallout imposed by his disruptive policies.

Still, a one-time downward adjustment in the value of the dollar against other currencies might be a good thing.

The dollar, owing to the demand for U.S. securities that its central status creates, has been historically overvalued and disadvantaged U.S. export and import competing industries.

Even after its recent decline, the trade-weighted exchange rate for the dollar against other currencies is about where it was just before COVID and above its value just before the 2008 Global Financial Crisis.

The dollar has enjoyed its status, because U.S. economic policy has been well managed and the Federal Reserve has enjoyed independence from political interference to ensure a sound currency.

Trump’s saber-rattling regarding Greenland has upset the western alliance but note, not U.S. stock and bond markets. And in the end, he will likely settle for the logical outcome.

This would include an enhanced U.S. military presence in Greenland, exclusion of Russian and Chinese commercial activities, and Europeans finally taking seriously Arctic defense against Russian incursions.

An enduring strong stock market indicates investors recognize the fundamental soundness of the U.S. economy, and that’s what they bet on when they hold U.S. fixed income assets like treasuries.

They likely anticipate that the next American president will be more temperate and less disruptive.

Trump has challenged dollar stability with his frequent attacks on Fed Chairman Powell and efforts to unseat Governor Cook. The former has failed to move Fed policy, and the Supreme Court will likely side with Cook.

The nomination of Kevin Warsh to be Fed chairman, as opposed to a White House insider like Kevin Hassett, indicates President Trump is feeling the pressure from the Senate to respect Fed independence.

Warsh believes Fed governance should be reviewed, and the ensuing Kabuki dance should satisfy Mr. Trump.

Markets are expecting two rate cuts this year and barring a significant change in economic conditions, Warsh will deliver just that.

Effectively, no change in policy by replacing Jerome Powell with Warsh.

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Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.