Dollar getting weaker and Treasury Secretary is not alarmed

Ben White reports in Politico,

The Trump administration declared a surprising war on the U.S. dollar on Wednesday, breaking from a long tradition in which top American officials generally voice support for a strong American currency.

Speaking at the World Economic Forum in Davos, Switzerland, Treasury Secretary Steven Mnuchin shocked Wall Street by lauding the impact a weaker dollar can have on U.S. companies as it makes exports cheaper for other countries to buy.

“Obviously, a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin told reporters in Davos. Mnuchin said recent declines in the value of the dollar against other currencies were “not a concern of ours at all.”

The dollar continued its recent descent following Mnuchin’s remarks. It’s now down about 10 percent against a basket of other currencies since last January, when President Donald Trump said the greenback was “too strong,” making it hard for U.S. companies to compete against China and other countries.

The currency decline has puzzled some economists and Wall Street traders because the dollar generally rises in value as the economy improves and the Federal Reserve increases interest rates. Yields on U.S. Treasury debt are currently rising as the Fed shifts policy. Rising yields usually make the dollar more attractive to investors, but the greenback keeps dropping.

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