At Davos, Mnuchin's 'weak dollar' talk sets nerves on edge

At Davos, Mnuchin's 'weak dollar' talk sets nerves on edge

At Davos, Mnuchin's 'weak dollar' talk sets nerves on edge

The yen, which strengthened past 109 yen to a dollar for a short while, traded at 109.00 yen, down 0.51 yen as at 1.02pm.

Hammond spoke after comments by U.S. Treasury Secretary Steven Mnuchin defending the weaker dollar as good for American trade sent the greenback tumbling.

Commerce Secretary Wilbur Ross later told CNBC that his colleague was "not advocating for a weaker dollar", but he also struck a combative tone. It last traded at S$1.305 on Dec 17, 2014.

Sterling's strong gains in 2018 have dragged down the relative value of FTSE 100 companies' overseas earnings and the blue-chip index shed a further 88.40 points to 7,643.43.

While the world's largest economy is indeed going strong, the dollar's 10 per cent decline since President Donald Trump took office belies her assertion that the currency is very stable.

"In the longer term, a stronger dollar is a reflection of the strength of the U.S. economy".

"In the longer term, we fundamentally believe in the strength of the dollar".

Trump's stance has already been challenged by Davos delegates with fellow leaders using the forum to talk up globalization as an economic force for good.


Investors were struck by Mnuchin's comments because for most of the past two decades, U.S. Treasury chiefs regularly stated that a "strong dollar is in the best interests of the United States".

Trump's latest remarks about the USA currency diverge somewhat from past comments he has made.

Many participants - CEOs, world leaders and heads of worldwide organizations - are concerned about Trump's economic agenda after he pulled out of the 12-nation Trans-Pacific Partnership trade deal.

Many in the markets think that Mnuchin has effectively ditched any idea of a "strong dollar" policy, which has been the mantra - publicly at least - of most Treasury Secretaries for about 20 years.

"We suspect Mnuchin and other Trump officials got an earful yesterday from Wall Street types who worry about retaliation from countries alarmed at a "beggar thy neighbor" dollar strategy along with tariffs", Valliere wrote. "So a trade war has been in place for quite a little while, the difference is the US troops are now coming to the rampart".

"I really hope that Secretary Mnuchin has a chance to clarify exactly what he said", Lagarde said in Bloomberg TV interview with Francine Lacqua and Tom Keene at the World Economic Forum's annual meeting in Davos, Switzerland.

"We want free and fair and reciprocal trade". Against a backdrop of an inversely correlated move in US interest rates, as historical data published in the article shows, chances are very high that the market will collapse as the trend progresses.

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