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.

Join the forum, it's quick and easy

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

Would you like to react to this message? Create an account in a few clicks or log in to continue.
Established in 2006 as a Community of Reality

Many Topics Including The Oldest Dinar Community. Copyright © 2006-2020


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

    Rocky
    Rocky
    Rocky
    Admin Assist
    Admin Assist


    Posts : 281327
    Join date : 2012-12-21
    • Post n°1

    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 11 Aug 2019, 12:05 pm

    Trump and the dollar .. Are we living the end of the policy of "strong currency first"?
    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 
    • Back to top
    Rocky
    Rocky
    Rocky
    Admin Assist
    Admin Assist


    Posts : 281327
    Join date : 2012-12-21
    • Post n°2

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

    Post by Rocky Sun 11 Aug 2019, 12:06 pm

    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.
    "This is something different, but what is not yet clear is how to describe the new dollar policy and the advantages of the new system," Shits said.
    Markets should take Trump's desire for a weaker currency seriously, says Cetser, now a fellow at the Council on Foreign Relations.

    The performance of the dollar index weighted trade movement from the nineties until 2019 - (Source: Bloomberg)
    Current Treasury Secretary Stephen Mnuchin has sent mixed signals about the dollar, which has gained against most of its peers in the G10 in 2019 so far.
    The dollar-weighted trade-adjusted inflation index is not far from the highest point recorded in 2003, showing the headwinds facing US exports.
    "In the long run, I believe in a strong dollar, which indicates a strong US economy," Mnuchin said in comments with CNBC on July 24.
    "It will not push for a weak dollar policy in the near term."
    The confirmation comes days after he told Bloomberg News that there was no change in the country's currency policy so far, a repudiation that has sparked speculation that the United States could later intervene in the markets to weaken the dollar.
    Wall Street analysts still see little prospect of intervention but not impossible, as the United States has not sold the dollar to weaken the currency since 2000, a move that has been part of a coordinated effort to support the euro.
    Unilateral intervention would spoil the long-term commitment reaffirmed last June by the United States along with other G20 members to avoid weakening exchange rates to boost exports.
    The events of late July indicate divisions within the US administration whether or not to take the dollar's devaluation.
    Bank of America strategists wrote in a July report that the simplest way for Trump to get a weaker currency is to say the United States is abandoning its policy.
    Although the phrase "strong dollar policy" is largely symbolic, abandoning it in favor of a "strong growth policy" could spread across markets and could lead to a 5-10 percent decline in the green paper, according to the US bank.
    However, the administration may need to be cautious to move the transformation in a way that does not undermine the situation regarding the acquisition of US assets, analysts warned.
    Replacing the Clinton administration's legacy would create many unknowns.
    The important issue, he says, is not the death of a strong dollar policy but the policy options that may be replaced later.


    • Back to top
      Current date/time is Tue 26 Nov 2024, 11:44 pm