Why Mnuchin’s remarks on dollar roiled markets

Treasury Secretary Steven Mnuchin appears to have learned a lesson that many of his predecessors also came to recognize: A Treasury secretary must tread delicately when discussing the dollar.

When Mnuchin suggested Wednesday at a global economic forum in Davos, Switzerland, that a weak dollar would benefit the United States, the U.S. currency fell in value and sparked concerns in global markets. A day later, Mnuchin tried to soften his comments.

Here are some questions and answers about the dollar and its relationship to the U.S. economy: What’s been the policy of recent administrations concerning the dollar?

In 1995, when Robert Rubin became Treasury secretary in the Clinton administration, he adopted the approach of always affirming that a strong dollar is in the best interests of the United States. From his years leading Goldman Sachs, Rubin knew that currency traders were alert for any variations in an administration’s views on the dollar and were ready to dump dollars at the first sign of diminishing support for the U.S. currency.

A lower-valued dollar can be worrisome, in part because it makes U.S. imports costlier and so can accelerate inflation, sometimes to worrisome levels. Rubin’s mantra worked so well that it was adopted, usually word for word, by the six Treasury secretaries who followed him.

When Mnuchin deviated to suggest that there were advantages for the United States in having a weaker dollar, the market reaction was swift. The currency fell to a three-year low against the euro and sank against the Japanese yen.

On Thursday, Mnuchin sought