Mnuchin Says No Change to U.S. Dollar Policy ‘As of Now’

Treasury Secretary Steven Mnuchin said there is no change in the U.S.’s dollar policy “as of now” but wouldn’t rule out a shift at some stage in the future.

There has been “no change to the dollar policy,” he said during an interview Thursday following a Group of Seven finance ministers’ meeting in Chantilly, France. “This is something we could consider in the future but as of now there’s no change to the dollar policy.”

The Trump administration has softened the long-held U.S. stance of supporting a strong dollar, favoring a stable exchange rate instead as it battles China in a trade war and threatens tariffs on other countries. Mnuchin has also signaled a preference for letting markets determine a currency’s value. “These are very, very large, liquid markets,” he said in the interview.

The dollar retraced gains against the euro after Mnuchin’s remarks, trading at $1.1217 per euro at 2:05 p.m. in London.

Mnuchin declined to comment on the levels of the U.S. currency.

When asked during a press briefing if he believes that a strong dollar is in the nation’s best interest, Mnuchin said: “I’m not going to make any specific comments on the dollar policy or the euro-dollar policy.”

Related: Trump Wants Fed to Weaken Dollar. Powell Says That’s Not His Job

President Donald Trump has repeatedly brought up his preference for a weaker dollar as of late. He tweeted this month that Europe and China are playing a “big currency manipulation game” and called on the U.S. to “MATCH, or continue being the dummies.” He’s made noise behind the scenes, too, lamenting to job candidates for the Federal Reserve board that the dollar’s strength could blunt economic growth.

Trump is increasingly concerned that a strong U.S. dollar is hampering economic growth ahead of his re-election and has asked his staff to find ways to weaken the greenback, Bloomberg News has reported.

Trump’s public comments have stirred speculation in markets about a possible U.S. currency intervention. Goldman Sachs Group Inc. last week flagged it as a low but increasing risk, while Pacific Investment Management Co. has said a full-blown currency war can no longer be ruled out.

In the interview Thursday, Mnuchin declined to say whether the administration has looked into intervening in markets to weaken the dollar.

Previous Moves

Administration officials believe that for any move on the dollar to succeed, the Fed must agree with the policy and clearly communicate its support, according to people familiar with the matter. The Treasury Department and Fed have coordinated the last three U.S. currency interventions, splitting the amount transacted evenly between them in 1998, 2000 and 2011 in order to nudge the dollar’s value.

Trump’s focus on the dollar was heightened after the European Central Bank said June 18 it may lower rates for the euro region, prompting a fall in the currency’s value against the greenback.

Trump has since complained that the Fed is putting U.S. exporters at a competitive disadvantage by not also considering a rate cut, and has said that the U.S. would be better off with ECB President Mario Draghi in charge of its central bank instead of Fed Chairman Jerome Powell.

Powell has signaled that he’s considering an interest-rate reduction, a move that would have the effect of weakening the dollar and may appease the president. Trump has repeatedly castigated Powell and Fed for rate increases last year.

A strong dollar gives American consumers more buying power for imports while raising prices for U.S. exports, widening trade deficits that Trump has vowed to close.

The Bloomberg dollar index is roughly unchanged on the year but a Fed trade-weighted measure of the U.S. currency is not far below the strongest since 2002, underscoring the headwinds American exports face overseas.


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell