The U.S. economy is going through a number of major regime changes—from a low and stable inflation regime to a mostly low but also more volatile one; from a financialized and hyperglobalized world to a more regionalized pattern of trade where capital is less free flowing; and from a monetary policy dominant model to one dominated by fiscal policy. Among all of this it would make sense to expect to see one other major area of regime change—the dollar; but despite previous reports to the contrary, the Trump administration is not declaring that it wants a weaker dollar.
While further softening in the exchange rate is expected, in this Economics Weekly, Richard de Chazal discusses why the U.S. is likely still unable to shed its exorbitant privilege and reserve currency status anytime soon, even if there are many reasons to think it might want to.