Feb 1, 2017

The dollar is having its worst start to a year in decades

The Trump Administration is breaking from a long-standing, bipartisan policy of supporting a strong dollar.

The greenback has fallen against its peers by 2.7%, the worst start to a year since 1987, after Ronald Reagan engineered a decline in the dollar to combat a flood of Japanese imports.

(function () { var attempt = 0, init = function(){ if (window.pym) { var pymParent = new pym.Parent("2017-02-01-dollar", "https://graphics.axios.com/2017-02-01-dollar/2017-02-01-dollar.html", {}); } else if (attempt++ < 40) { setTimeout(init, 50); } }; init(); })();

Data: Money.net; Chart: Andrew Witherspoon / Axios

Why it matters: Conventional wisdom used to dictate the a strong dollar was good for the U.S. because it helped American consumers buy imports. And a stronger dollar is the natural result of the greenback's reserve-currency status, which gives the U.S. geopolitical leverage. But the average American doesn't need cheap stuff as much as he needs a good-paying job, and a strong dollar disadvantages exporters.

Watch out: Reversing a strong-dollar policy could lead to countries competitively devaluing their currencies, and the return of higher inflation.

Go deeper