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Last week, Trump blasted the strengthening of the dollar in a media interview, saying that the United States faces "serious currency problems" and that the exchange rate of the dollar against currencies such as the yen is "unbelievable." Regarding the issue of the strong dollar, U.S. Treasury Secretary Yellen did not respond directly, but publicly "passed the buck" to the market.

On Thursday, July 25, local time, Yellen, who arrived in Rio de Janeiro, Brazil to attend the G20 Finance Ministers' Meeting, said at a press conference held there that "the United States has been implementing a tight monetary policy in the past few years" with interest rates higher than other parts of the world, "which has triggered capital inflows and promoted the strengthening of the US dollar." With a strong economy and the Federal Reserve's efforts to curb inflation, Yellen believes that the strengthening of the US dollar "is indeed expected," saying "We believe that the system should work this way."

Yellen said that over time, basic economic attributes will be reflected in exchange rates. She pointed out that G7 countries, including the United States, are committed to letting the market determine exchange rates and will only intervene in the exchange rate market when there is excessive volatility and after consultation with partners.

Promoting exports through a "weak dollar" is one of Trump's policies that the market is most concerned about. Trump has recently accused the strong dollar of hurting the competitiveness of US exports. However, Wall Street suspects that after Trump takes office, the dollar may not depreciate, but appreciate instead.

The media recently summarized the general views of Wall Street economists, saying that economists expect that if Trump is elected, with other factors remaining unchanged, Trump will impose tariffs on US trading partners and introduce tax cuts that may push up inflation and interest rates, which will stimulate the rise of the US dollar.

The media said that Trump's previous performance as president showed that the US president had no direct means to devalue the dollar. The weakening of the dollar depends more on the Federal Reserve maintaining low interest rates, or the United States forcing other countries to raise their exchange rates, which may make investors wary.

But some economic advisers have been brewing a dollar-centered trade policy, including a candidate who was previously rumored to be the U.S. Treasury Secretary after Trump took office. Among them, Robert Lighthizer, who served as the trade representative of the Trump administration, is open to several options for balancing the U.S. deficit, including making up for the deficit by controlling capital inflows into the United States.

Another adviser, Scott Bessentt, a hedge fund manager who raised money for Trump’s campaign, has talked about expanding the Biden administration’s “friendly shoring” policy, creating a tiered system among America’s partners that gives trade advantages to countries that can help achieve the goal of a weaker dollar.

In addition to the above methods, Trump can also choose some more direct tactics, such as verbal intervention or letting the US Treasury sell dollars.

Compared with intervening in the foreign exchange market, encouraging capital outflows from the United States is more likely to succeed. However, Deutsche Bank pointed out that there are few precedents in history for actually using this approach. Switzerland used this trick in the 1970s, and the Swiss franc actually strengthened.

Weakening the independence of the Federal Reserve may be the most effective way to depreciate the dollar. Deutsche Bank believes that the possibility of this happening is low. The next US president can only appoint two of the 12 voting members of the Federal Reserve in the next four years. Last week, Trump also denied plans to weaken the independence of the Federal Reserve in a media interview and supported Powell to continue to serve as the chairman of the Federal Reserve.