Monday, 21 January, 2019

Mnuchin Says Weaker Dollar Is Good for US Due to Trade

U.S. Treasury Secretary Steven Mnuchin attends the daily briefing at the White House in Washington D.C. U.S U.S. Treasury Secretary Steven Mnuchin attends the daily briefing at the White House in Washington D.C. U.S
Nellie Chapman | 25 January, 2018, 03:36

US Treasury Secretary Steven Mnuchin on Wednesday said Donald Trump's visit to the World Economic Forum in Davos was meant to promote worldwide partnerships, despite the US president's protectionist "America First" policies.

According to the ICE U.S. Dollar Index which weighs the U.S. dollar against other global currencies, the dollar fell below the 90 mark for the first time since the end of 2014.

While US policy typically requires the government to talk up the strength of the currency of the world's largest economy, comments of one of President Donald Trump's top officials has said the weaker currency could boost its economic prospects.

Adding to those fears, Commerce Secretary Wilbur Ross said USA trade authorities are investigating whether there is a case for taking action over China's infringements of intellectual property.

The Euro and the Yen each gained against the dollar following Mnuchin's comments. GE also forecast more weakness at its power business this year, a unit that produced 60 percent of profits as recently as 2016.

'This is really about not just what's good for the USA, but what's good for the rest of the world as well - given, that we are obviously one of the largest trading partners in the world, one of the largest investment opportunities in the world.

Earlier this week, the United States announced new tariffs on foreign washing machines and solar panels, the first tariffs from the Trump administration.

"It just means that President Trump is looking out for American interests, no different than other leaders look out for their own", he added.

It's an observation Mnuchin has made several times to a domestic audience since becoming Treasury secretary a year ago.

Analysts in a Reuters poll published on January 5 anticipated a tough 2018 for the dollar coming off its worst annual performance in 14 years when it lost 10 percent. "There's a long way down", Sinche said.

Toady, after weeks of the Colombian peso strengthening as crude prices held high and the dollar taking an abrupt tumble amid market-moving comments by the USA treasury secretary, the Andean nation currency hit its strongest level against the greenback in more than two years. But on the other hand, the market has been worrying about the fact that central banks are clearly diversifying reserve holdings away from the dollar, and US assets, like Treasurys could become less appealing.

"We believe trade is good for all three nations and that's what we're hoping for", he told CNBC from Davos.

"I think the dollar will stay the reserve currency". Longer-term, he said the strength of the dollar is "a reflection of the strength of the USA economy". "That will be radical change", said Lennon Sweeting, chief market strategist at XE in Toronto.