US dollar drops after Mnuchin backs weaker greenback
The dollar sank to a three-year low Wednesday after Treasury Secretary Steven Mnuchin said a weaker U.S. currency would boost U.S. trade.
Mnuchin made the comment during a press conference at the World Economic Forum in Davos, Switzerland.
"Obviously, a weaker dollar is good for us as it relates to trade and opportunities," Mnuchin said.
He said the White House was not focused at all on the short-term value of the dollar.
"Longer term, the strength of the dollar is a reflection of the strength of the U.S. economy and the fact that it is and will continue to be the primary currency in terms of the reserve currency," he added.
As the dollar dropped, currencies like the British pound, Japanese yen and the euro rose.
According to the ICE U.S. Dollar Index which weighs the U.S. dollar against other global currencies, the dollar fell below the 90 mark for the first time since the end of 2014.
The dollar raced upward between 2014 and the November 2016 election of President Donald Trump. The latest downturn means that over half of that two-year gain has been wiped out.
Trump has upset global markets during his first year in office, including dropping the U.S. out of the Trans-Pacific Partnership trade deal between 12 Asian, North American and South American countries. He has also strongly criticized the North American Free Trade Agreement (NAFTA), a landmark trade deal between the U.S., Canada and Mexico.
Earlier in the week, he imposed stiff tariffs on foreign-made solar panels and washing machines.
Trump's Commerce Secretary Wilbur Ross spoke alongside Mnuchin and discounted any suggestion that the White House was attempting to launch an international trade war.
"We don't think that adhering to the rules is protectionist," Ross said. "We think, in fact, it is essential to having markets operate properly, to have people play by the rules."