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US winning on currency (Read 1632 times)
bogarde73
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US winning on currency
Jul 27th, 2017 at 3:37pm
 
“Much of the world has been waging a cold currency war (sic) since the autumn of 2016, and so far the winner is Donald Trump,” wrote Joachim Fels, global economic adviser for asset manager Pimco, in a Wednesday blog post.

Trump regularly charged during the presidential campaign that other countries were taking advantage of the U.S. by manipulating their currencies, leaving U.S. exporters to suffer from an overvalued dollar. The Trump administration hasn’t followed through on a campaign pledge to declare China a currency manipulator, but has continued to at least talk tough on trade-related issues.

“While the U.S. administration and the Republican majority in Congress are yet to deliver on most of their policy goals, they have succeeded in making the dollar more competitive. How? By putting an end to the decades long official mantra that ‘a strong dollar is in our interest’ and by threatening other nations, implicitly and sometimes explicitly, with protectionist policies,” Fels wrote. “ In short, all this trade bullying has killed the dollar bull.”

Indeed, as MarketWatch wrote in January, Trump’s abandonment of the strong dollar mantra was seen as an important signal, even if a strong dollar policy had often received little more than lip service from previous U.S. administrations.

. . . .Things started to shift earlier this year, he said, with China fixing its yuan stronger versus the dollar, the ECB signaling it is slowly moving toward winding down its own extraordinary monetary stimulus, and the Bank of Japan leaving policy on hold.

With the dollar sinking in response, “the Trump administration has had no reason to turn aggressively protectionist. Mission accomplished,” Fels said.

:MarketWatch

[IMO, voiced over a long time, we need to be heading in the same direction]
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bogarde73
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Re: US winning on currency
Reply #1 - Jul 29th, 2017 at 12:47pm
 
This is timely apropos my closing comment above, from SMH Business today:

Rising dollar sends jitters through local manufacturers

"Everyone's got their own pinch point," says Simon Whiteley, one of the many local exporters confronting the danger of a soaring Australian dollar.

For his business, Corex, which manufactures solid plastic sheeting for signage, packaging and construction, the runaway exchange rate is proving a "two-edged sword".

The advantage is that the raw materials he has to import have suddenly become cheaper. But Corex supplies its fabricated products to clients in south-east Asia, China and New Zealand, as well as the domestic market. And if the dollar rises too high for too long, Mr Whiteley explains, overseas customers could start reconsidering their supply chains.

This week, the dollar soared past US80 cents, to a high of 80.66 cents, prompting alarm bells among some business groups and fears that Australian export-exposed businesses will start losing out to foreign competitors.

"For me, the low 70 cents or 60s are great ... somewhere in that band," he says.

"I'm used to having fluctuations, ebbs and flows, but if this level sustained over a long period, that's when you experience the tightness."

According to Innes Willox, chief executive of the Australian Industry Group, US80 cents is "outside of the comfort zone" that manufacturers and other trade-exposed industries have enjoyed in recent years.

"All growth segments across manufacturing and services exports rely on more than just the AUD for their competitive advantage," he said. "But even so, a higher AUD remains an ever-present risk to their recovery and outlook.
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The_Barnacle
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Re: US winning on currency
Reply #2 - Jul 31st, 2017 at 11:21am
 
A lower dollar also represents a lack of confidence in the US economy.

Quote:
The US dollar surged to a 14-year-high after Mr Trump’s election as investors bet his fiscal spending, deregulation and tax reform plans would bolster the US economy. But it has given back about 60 per cent of its postelection gains since its January peak amid doubts that the administration will be able to deliver on those proposals.

Treasury Secretary Steven Mnuchin has said that the dollar can have negative consequences for US companies. But he has reaffirmed that the US prefers a strong currency over the long term.

http://www.theaustralian.com.au/business/markets/us-dollar-slumps-after-donald-t...

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bogarde73
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Re: US winning on currency
Reply #3 - Jul 31st, 2017 at 11:46am
 
There are always winners & losers. Currency policy will be determined by who holds the levers (sometimes out of your control) and who they want to be the winners.
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