Saturday, August 10, 2019

StarBoyTv...Making money war: Will Trump 'manipulate' the overvalued dollar?

The White House is seeking the best way to stimulate the US economy and win the escalating trade fight with China.

United States President Donald Trump loves competition. He constantly talks about being bigger, stronger and tougher than opponents. And he wants to "Make America Great Again".
But Trump is begging for a weaker dollar. Less powerful. Not as valuable as foreign currencies. 
When the dollar is down, the US economy sees some benefits - as American goods are less expensive to buy abroad. Higher exports can boost production at firms domestically and create more jobs - both of which are political rocket fuel for a president seeking re-election in 2020.
Trump believes the US should match efforts by other countries to increase their own exports by weakening their currencies. 
This week, after Beijing let the yuan slide below the seven-per-dollar-mark, the US Treasury Department labeled China a currency "manipulator" - accusing it of weakening the yuan to gain an unfair trade advantage.
The Treasury said the People's Bank of China exercises too much control over exchange rates. Markets tanked, fearing the US-China trade war may be shifting gears into a currency war.
The tension sparked renewed speculation that Trump might order sales of the US dollar, which is near a multi-decade high. 
The International Monetary Fund says the US dollar is about six percent stronger than implied by economic fundamentals.
Yet on Friday, Trump said he had no plans for direct intervention to weaken the dollar.
"We have the safest currency in the world," Trump told White House reporters as he was heading to a fundraiser in the Hamptons seaside resort area east of New York City. "We have the standard of the world."
But the almighty dollar could lose value in a few different scenarios. 

'Timing is wrong'

Stan Shipley, a macro research analyst at Evercore ISI, told Al Jazeera that currency meddling would be "irresponsible" because it could invite retaliatory measures from other countries and endanger the dollar's status, sparking more turmoil in the markets.
"This isn't 2017 and 2018, when the economy was in pretty good shape here and abroad," Shipley told Al Jazeera.

No comments:

Post a Comment