US dollar takes another beating after Mnuchin comments
HONG KONG: The US dollar took another beating yesterday after two of United States President Donald Trump’s top cabinet members talked down the currency and hinted at a more belligerent trade policy.
The sell-off in the greenback, especially hit exporters on Japan’s Nikkei index, which tumbled for a second straight day, although dollar-priced oil and gold extended gains.
United States Treasury secretary Steven Mnuchin, speaking at the Davos gathering of the political and business elite, said: “Obviously a weaker dollar is good for us, it’s good because it has to do with trade and opportunities.”
His comments sent the US unit, which was already under pressure, tumbling with analysts suggesting it could be a part of the Trump administration’s America First policy to help its own exporters.
The comments came days after the US announced stinging tariffs on imports of solar panels and large washing machines, angering China and South Korea.
US Commerce Secretary Wilbur Ross defended those tariffs and warned Washington would be prepared to fight back in future against countries it felt had flouted the rules.
The developments ramped up fears of a global trade standoff and worries about their impact on the world economy, which was finally moving on track a decade after the financial crisis.
“To the extent that trade was disrupted, it’s probably not good for economies, for US companies and corporations, and would probably put pressure on the rising stock market,” said Michael Cuggino, president and portfolio manager at the Permanent Portfolio Family of Funds in San Francisco.