© Bloomberg. A 2017 50 subject uncut sheet of $1 dollar notes bearing the name of U.S. Treasury Secretary Steven Mnuchin sits on display at the U.S. Bureau of Engraving and Printing in Washington, D.C., U.S., on Wednesday, Nov. 15, 2017. A change in the Senate tax-overhaul plan that would expand a temporary income-tax break for partnerships, limited liability companies and other so-called
(Bloomberg) — White House spokeswoman Sarah Sanders said a stable U.S. dollar reflects the strength of the world’s largest economy and reiterated President Donald Trump’s support for market-determined exchange rates.
“Currently we have a very stable dollar because of how well the U.S. is doing and is as powerful as it’s ever been,” she said Wednesday at a briefing in Washington, responding to a question from a reporter. “We believe in free-floating currency. The president’s always believed in that.”
The dollar fell to a three-year low on Wednesday after Treasury Secretary Steven Mnuchin said earlier that a weaker U.S. currency benefits trade and that he’s not concerned by its value over the short run. The longer-term strength of the dollar is an indicator of the economy’s health, he added.
It’s an observation he’s made several times to a domestic audience since becoming Treasury secretary last year, but it took on added resonance on a bigger stage at the elite global gathering in Davos, and comes at a time when the dollar has been struggling.
While it may be jarring for investors to hear a U.S. Treasury secretary discuss the merits of a weaker dollar, it fits with the Trump administration’s stance on trade policy aimed at supporting exporters and reducing the nation’s trade deficits.
Even Trump has signaled his preference for a softer dollar. He said in an interview with the Wall Street Journal in April that because of confidence in him as president, the currency was rising, but that such strength could become harmful to the economy.
Mnuchin’s earlier comments added to pressure on a greenback that’s been in decline for a year, with the effects rippling across markets as growth in European and emerging economies continues to accelerate past America.
Commerce Secretary Wilbur Ross, also speaking at the World Economic Forum in Davos in an interview with CNBC, later seemed to backpedal on Mnuchin’s comments. He said investors overreacted and that fellow Cabinet officials in no way advocated a shift from America’s long-standing strong dollar policy.
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