The strong US dollar mantra apparently will not get drained along with the rest of Washington’s swamp.
US Secretary of the Treasury Steven Mnuchin said a strong US dollar signaled confidence in the US economy and that the currency’s appreciation over a longer horizon is “a good thing,” echoing a policy in place for more than two decades.
In an interview with the Wall Street Journal, he added a caveat that short-term US dollar gains can be good or can have “not so positive” effects.
The message is similar to the one Mnuchin delivered to US lawmakers at his confirmation hearing last month, when he sought to clarify an earlier suggestion by US President Donald Trump, just before he took office, that he preferred a weaker US dollar.
Trump’s remarks indicated a break from a more than two decades of US support for a strong US dollar, a shift that could help his plans to shrink the US trade deficit.
A weaker US dollar makes imported goods more expensive.
“For longer-term purposes, an appreciation of the [US] dollar is a good thing and I would expect longer term, as you’ve seen over periods of time, the dollar does appreciate,” Mnuchin said, according to the article published on Wednesday. “In the short term, there are certain aspects [of a strong currency] that are positive about the dollar for our economy and there are certain aspects that are not as positive. ”
Mnuchin linked gains for the US dollar since the election to as a sign of support for Trump, who campaigned on promises to almost double economic growth and unleash fiscal stimulus with tax cuts and infrastructure spending.
Trump’s “drain the swamp” campaign slogan referred to ridding the capital of self-interested officials and ineffective policies. The Bloomberg Dollar Spot Index has gained 3.3 percent since the November last year election.
“A lot of the appreciation of the [US] dollar since the election in particular is a sign of confidence in the Trump administration and the economic outlook for the next four years,” Mnuchin said.
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