U.S. Treasury Secretary Steven Mnuchin Highlights The Importance Of A Strong Dollar In Long Term Economic Growth
Steven Mnuchin, the U.S. treasury secretary, recently stated that he believes that a strong US dollar performance is a key factor towards making sure that the U.S. economy remains strong over the long term.
Mnuchin pointed out in his statement that he would not encourage the Federal Reserve to implement policies that weaken the dollar in the future. This is based on the fact that President Trump's administration’s pursuits seem to be weakening the greenback, contrary to the previously long-standing efforts aimed at strengthening the currency.
“I do believe in a strong dollar, which signifies a strong U.S. economy, a strong stock market and particularly because of the president’s economic policies,” stated Mnuchin.
Trump’s efforts are aimed at fostering economic growth through better rates
The U.S. dollar's performance has particularly been negatively influenced by the trade war with China and also the rising geopolitical and economic tensions with other countries. President Trump’s aggressive approach might be weakening the dollar, but it was aimed at lowering interest rates to facilitate more economic growth.
Trump previously made headlines for openly criticizing the Federal Reserve for failing to slash interest rates. Mnuchin believes that there are many issues about the trade war that were part of the trade discussions between the two countries. He also expressed optimism in the potential for progress in the China-U.S. negotiations.
Meanwhile, the US dollar index reached the 97.340 level after a 0.1% decline during Wednesday’s trading session at 11:03 AM ET. The dollar index measures the performance of the US dollar against a group of six major currencies. It, therefore, gives a good view of how the greenback performs relative to the performance of its counterparts from other countries. The dollar index's price movement is also heavily affected by the U.S. economy's performance.
The US dollar's performance relative to other currencies
The US dollar's performance this week demonstrates strong gains over the Euro with the price of the currency pair dropping from 1.1225 on Monday to about 1.1131 on Thursday. This performance highlights the weaker Euro mainly due to Brexit concerns as well as the uncertainties of having a new pro-Brexit Prime Minister following Boris Johnson’s appointment to the position.
The US dollar's performance against Japanese Yen indicates a bear trend on Thursday with the price of the USD/JPY currency pair hovering at around 108.09 at the time of this press. This means that the dollar lost by a significant margin considering that the price of the currency hit a high of around 108.28 on Wednesday.
Meanwhile, the GBP/USD currency pair has been characterized by dips and recoveries this week due to the highly volatile nature of the Pound. This is in line with the announcement about Johnson as the new U.K. Prime Minister, as well as his announcement through which he revealed that he is in pursuit of a new partnership with the E.U. Johnson also promised to make sure that the Brexit issue is handled in a manner that will have the U.K.'s best interests at heart.