US President Donald Trump speaks to the press after signing a bill for border funding legislation in the Oval Office on Monday. Photo: AFP
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https://scmp.com/news/china/article/3017186/us-should-start-manipulating-dollar-donald-trump-says-accusing-china-and China
US should start manipulating the dollar, Donald Trump says, accusing China and Europe of playing ‘big currency manipulation game’
- Such a move would directly contradict official US policy not to manipulate dollar’s value to gain trade advantages
- Treasury Department earlier found no country meets criteria for being labelled a currency manipulator, but put China and eight other countries on watch list
As a presidential candidate in 2016, Donald Trump frequently charged that China was manipulating its currency. Photo: Reuters
US President Donald Trump on Wednesday accused China and Europe of playing a “big currency manipulation game” and said the United States should match that effort – a move that directly contradicts official US policy not to manipulate the dollar’s value to gain trade advantages.
In a tweet, the president said that if America did not “match” China and Europe, the country would continue “being the dummies who sit back and politely watch as other countries continue to play their games – as they have for so many years”.
Trump’s own Treasury Department in May found that no country met the criteria of being labelled a currency manipulator, although the report did put China and eight other countries on a watch list.
A country manipulates its currency when it drives down the value to make its exports cheaper and imports more expensive.
As a candidate in 2016, Trump repeatedly charged that China was manipulating its currency and as president he would immediately label China as a currency manipulator.
However, after taking office, Trump’s Treasury Department has issued five reports on the subject, required by law every six months. In each report it said no country met the criteria to be labelled a currency manipulator.
Trump’s tweet seemed to have no impact on currency markets, a situation that would likely change if US Treasury Secretary Steven Mnuchin began threatening to use currency manipulation to drive down the dollar’s value.
China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA. We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games - as they have for many years!
— Donald J. Trump (@realDonaldTrump) July 3, 2019
The treasury secretary has the job of commenting on the dollar’s value and also implementing intervention to buy or sell dollars in currency markets to influence the dollar’s value.
US administrations for decades have pledged in international communiques not to intervene in currency markets for the purpose of influencing trade flows.
A weaker dollar would boost US exports but could run the risk of causing foreign investors who are helping to finance the federal government’s US$22 trillion national debt to move their investments elsewhere to avoid the risk of currency depreciation lowering their returns.