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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    Trump and the dollar .. Are we living the end of the policy of "strong currency first"?

    Rocky
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    • Post n°1

    policy - Trump and the dollar .. Are we living the end of the policy of "strong currency first"? Empty Trump and the dollar .. Are we living the end of the policy of "strong currency first"?

    Post by Rocky Sun Aug 11, 2019 12:45 pm

    Trump and the dollar .. Are we living the end of the policy of "strong currency first"?
    policy - Trump and the dollar .. Are we living the end of the policy of "strong currency first"? 640

     11 August 2019 10:25 AM
    Edited by Sally Ismail
    Direct: Since the 1990s, the United States has clearly stated that a strong dollar is in the best interest of the state.
    Global investors took this position for granted, giving them confidence that US officials will not devalue the US currency.
    But the messy messages from President Donald Trump's administration are destabilizing those assumptions.
    On July 26, Trump said a strong dollar was nice but made competition difficult, adding that he did not rule out action to weaken the US currency.
    Trump's comments contrasted with remarks by White House economic adviser Larry Kudlow that the United States would not intervene in currency markets.
    Public questions about US currency policy are increasing, as a strong dollar doctrine was introduced by Treasury Secretary Robert Rubin in 1955 as a means of boosting foreign demand for US Treasuries.
    This doctrine helped establish the dollar as the world's preferred reserve currency, as the pledge not to devalue the green paper encouraged international investors and US trading partners to invest their cash in US assets.
    A weaker dollar would provide some advantages, as US manufacturers may increase sales abroad because their goods will become cheaper for foreign customers.
    At the same time, US companies and people who buy imported goods will face higher prices.
    Abandoning that policy would also have implications for global markets and US government funding in the long run.
    The confidence of foreigners in the dollar makes them more willing to hold US debt, reducing the interest rate that the Treasury should pay.
    For now, attracting global funds is no problem: foreign holdings of US Treasury bonds stood at a record high of around $ 6.5 trillion in May.
    Investors have few alternatives, with many bonds in Europe and Japan offering negative yields, compared with a yield of about 2 percent on ten-year US government debt.
    But Trump's pressure to weaken the currency could begin to curb these inflows of international funds, said Catherine Mann, chief global economist at Citigroup.
    A former deputy assistant at the Treasury's International Economic Analysis Unit, Brad Cetser, believes that a strong dollar policy ended once Trump began complaining about the green paper's strength.
    While comment on currency policy in previous US administrations was within the purview of the Treasury Department, Trump went out of fashion early on.
    Before even taking office, Donald Trump said in early 2017 that a strong dollar was "wiping out" us.
    In the following years, the president moved to Twitter to criticize the dollar's strength and focus on Europe and China over what he saw as currency manipulation.
    Given the strength of communication over the past two years, the era of strong dollar policy is still believed to be over, says BGIM's chief fixed-income economist and former Treasury official Nathan Sheets.
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