Dollar is 'too strong,' changes stance on China
- Author: Zachary Reyes Apr 13, 2017,
Apr 13, 2017, 16:59
Trump's new statements many not reflect a permanent change of view, as the president's policies have been continually fluid since he entered politics.
"This is a little bit of a correction of the move we saw overnight following the comments from Trump", said Commerzbank currency strategist Thu Lan Nguyen, in Frankfurt. In the October 2016 report, the Treasury Department said China fulfilled only one of the three main criteria - maintaining a large bilateral trade surplus with the United States, by exporting more than it imports.
The less-confrontational approach drew harsh criticism from Senate Minority Leader Charles Schumer, who had urged a more aggressive stance in a call with Trump during the Xi summit. The president confirmed this decision in a press conference Wednesday afternoon. The bank mainly helps "a few companies - and these are companies that can do very well without it".
But Schumer argued that this was mistake: "The best way to get China to cooperate with North Korea, is to be tough on them with trade, which is the number one thing China's government cares about".
Trump acknowledged his position had changed in his interview with the Wall Street Journal.
"It turns out that, first of all, lots of small companies are really helped, the vendor companies", Trump told the Journal.
Trump also threw his support behind the Export-Import Bank, which subsidizes US exports, after opposing it during the campaign.
The data came amid a warming of relations between China and USA, with Trump backing away from labeling China a currency manipulator in an interview with the Wall Street Journal.
"It could also be taken as an implicit threat to other countries that if the dollar stays strong and if US bilateral trade imbalances with its major trading partners stay high or continue to expand, that he will take some sort of action", Prasad said.
While China isn't now manipulating its currency, Schumer maintained that the country would "as soon as the tide turns". When countries buy up foreign currencies and sell their own, the price of their own currencies on the global market falls, allowing their exports to trade at a discount.
This was also Obama's view.
The Treasury may toughen its currency criteria so the yuan is found to be out of step with economic fundamentals, said David Dollar, a former Treasury official and China expert at the Brookings Institution in Washington.
"We have a process with Treasury, where we go through and look at currency manipulation across the board", said Mnuchin, in his February interview with CNBC.
"Trump also told the Journal he'd consider re-nominating Yellen to chair the Fed's board of governors, after attacking her during his campaign".
In the interview, Trump says, "I do like a low-interest rate policy, I must be honest with you".