Published: Fri, January 26, 2018
Life&Culture | By Ben Goodman

World markets lap up Mnuchin's dollar view

World markets lap up Mnuchin's dollar view

A day after sending the dollar reeling with comments supportive of a weak U.S. currency, U.S Treasury Secretary Steven Mnuchin said the Trump administration was not seeking a trade war but would defend its economic interests, Reuters reported.

"The dollar is going to get stronger and stronger and ultimately I want to see a strong dollar", Trump told CNBC in an exclusive interview from the World Economic Forum in Davos, Switzerland. "It will also raise fears about the risk of global currency wars again - although we should be careful not to read too much into an errant comment made at Davos".

The view largely breaks with a longstanding policy in which USA officials back a strong dollar and it raised the possibility that the Trump administration may be trying to talk down the currency to give the US economy an edge in trade as part of an "America First" strategy.

THE Singapore dollar hit a three-year high against the US dollar as equity markets fell and gold rose after US Treasury Secretary Steven Mnuchin said that a weaker greenback would be positive for the US economy.

Mnuchin's comments give "a green light to ongoing dollar weakness as far as the market is concerned", said Shahab Jalinoos, global head of foreign-exchange trading strategy at Credit Suisse Group AG in NY.

For a quarter-century, United States treasury chiefs have espoused the benefits of a strong dollar, so it may be jarring for investors to hear a treasury secretary discuss the merits of a weaker one.

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The Trump administration's chief spokesman for the US dollar, Treasury Secretary Steven Mnuchin, has given an extra nudge to an already sliding greenback, shaking up currency markets in the process. "As we look at USA growth, it continues to look quite good and is a very attractive place to invest", he added.

Despite Mnuchin's rebuttal, there's a lingering suspicion that the Treasury secretary is content with the dollar's weakness, according to Ken Rogoff, a Harvard University economics professor and former chief economist at the International Monetary Fund.

It is a message Mr Trump is likely to send in person on Friday when he becomes the first U.S. president in 18 years to address the Davos gathering of corporate executives and investors who tend to favour free trade.

Other Trump administration officials such as Commerce Secretary Wilbur Ross also mentioned the weaker dollar as a potential positive while speaking in Davos.

"Many countries are very good at the rhetoric of free trade, but actually practice extreme protectionism".

South of the border, US stocks wobbled and finished mostly lower on Wall Street as technology companies including chipmakers dropped. "We believe in free currencies and that there's both advantages and disadvantages where the dollar is in the short-term". "So we're very happy with where the currency is at the moment". With only a thin majority, the Republicans can't afford to lose more than one seat or it would become next to impossible for President Donald Trump to push legislative agendas through Senate and.make them law.

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