April 13, 2017
Welcome to BACKWARDS TOWN – where everything goes in the opposite direction!
President Donald Trump said he won’t brand China a currency manipulator, retreating from a core campaign promise, though he argued that a strong dollar is hampering the ability of American firms to compete.
Trump, in an interview with the Wall Street Journal on Wednesday, appeared to acknowledge that China hasn’t been intervening to weaken its currency recently. “They’re not currency manipulators,” he said.
IT WAS ALL A BIG MISTAKE!
It’s a shift of opinion after Trump accused China during last year’s election campaign of manipulating its currency to gain the upper hand in trade and vowed to label the country a manipulator on his first day.
U.S. 10-year bond yields slumped and the dollar fell after Trump indicated in the interview that the U.S. currency is getting so strong that it’s harmful to the economy, while other nations “are devaluing” their currencies.
“I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me. But that’s hurting — that will hurt ultimately,” he told the newspaper. “It’s very, very hard to compete when you have a strong dollar and other countries are devaluing their currency.”
His blunt remarks about the greenback mark a departure from the recent practice of presidents, who have generally steered clear of commenting on the value of the currency for fear of jolting markets. It’s usually left to the Treasury secretary to comment on the government’s behalf on currency matters, and the standard line is that a strong dollar is good for America.
Treasury Secretary Steven Mnuchin has said that long-term strengthening of the dollar is in the best interest of the economy, while in the short-term it could create issues.
In the interview, the president left open the possibility of reappointing Janet Yellen as Fed chair, adding that he likes “a low interest-rate policy.”
The question now is: is there any single campaign promise which will not have been broken in the first 100 days?