White House Declares Open Season on the Dollar at Davos

Source: Bloomberg News


By Cecile Gutscher and John Ainger
January 24, 2018, 9:29 AM EST

Whether or not the White House choreographed the dollar’s slide to the lowest in three years, it may have just declared open season on the currency.

The greenback is caught in the rhetorical cross hairs after Treasury Secretary Steven Mnuchin endorsed the dollar’s decline as a benefit to the American economy at Davos on Wednesday. His comments came days after the U.S. president stepped up his protectionist push by slapping of tariffs on solar panels and washing machines.



“It gives 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 New York. “As long as these kind of messages are presented it allows the market to imagine that’s what the administration wants to see. It validates the idea that further weakness is possible.”

Losses for the greenback have mounted since Trump’s inauguration a year ago, with the currency weakening against every Group-of-10 peer. That may have more to do with the vagaries of central-bank policy and interest rates and divisions in Washington than it does with Trumponomics. But whatever the reason, the administration’s acceptance of a weak dollar lends fresh ammunition to bears.

“Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin told reporters in Davos. The currency’s short term value is “not a concern of ours at all,” he said.






Read more: https://www.bloomberg.com/news/articles/2018-01-24/white-house-seen-declaring-open-season-on-dollar-at-davos