Advanced Search

The story appears on

Page A1

April 14, 2017

GET this page in PDF

Free for subscribers

View shopping cart

Related News

Home » Business » Economy

Trump backs down on currency claim

Source: Agencies | 00:01 UTC+8 April 14, 2017 | Print Edition

US President Donald Trump said on Wednesday that his administration would not label China a currency manipulator, backing away from a campaign promise, though he said the US dollar was “getting too strong” and would eventually hurt the economy.

In an interview with The Wall Street Journal, Trump also said he would like to see US interest rates stay low, another comment at odds with what he said during the election campaign.

A US Treasury spokesman confirmed that the treasury department’s semi-annual report on currency practices of major trading partners, due out soon, will not name China as a currency manipulator.

The US dollar fell on Trump’s comments on both the strong dollar and interest rates, while US Treasury yields fell on the interest rate comments, and Wall Street stocks slipped.

“They’re not currency manipulators,” Trump told the Journal about China, in a statement at odds with his election campaign promises to slap that label on China on the first day of his administration as part of his plan to reduce Chinese exports to the US.

The Wall Street Journal paraphrased Trump as saying that the reason he changed his mind on the currency issue was because China has not been manipulating its yuan for months and because taking the step now could jeopardize his talks with China on confronting the threat from North Korea.

The US last branded China a currency manipulator in 1994. Under US law, labeling a country as currency manipulator can trigger an investigation and negotiations on tariffs and trade.

Trump also told the Journal that he respected Federal Reserve Chair Janet Yellen and said she was “not toast” when her current term ends in 2018.

That was also a turnaround from his frequent criticism of Yellen during his campaign, when he said she was keeping interest rates too low.

At other times, however, Trump had said low rates were good because higher rates would strengthen the dollar and hurt American exports and manufacturers.

“I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me. But that’s hurting — that will hurt ultimately,” Trump said yesterday.

“It’s very, very hard to compete when you have a strong dollar and other countries are devaluing their currency,” Trump told the Journal.

The dollar fell broadly on Trump’s comments on the strong dollar and on his preference for low interest rates. It fell more than 1 percent against the yen, sinking below 110 yen for the first time since mid-November.

“It’s hard to talk down your currency unless you’re going to talk down your interest rates and so obviously he’s trying to get Janet Yellen to play ball with him,” said Robert Smith, president and chief investment officer at Sage Advisory Services in Texas.

Trump’s comments about the Fed were his most explicit about the US central bank since he took office in January, and suggest a lower likelihood that he plans to try to push monetary policy in some unorthodox new direction.

Some key Republicans have advocated an overhaul of how the Fed works, using a rules-based policy that would likely mean higher interest rates — not the lower ones Trump said he prefers.

In mid-March, the Fed increased interest rates for the second time in three months, increasing its target overnight rate by a quarter of a percentage point.

“Maybe he’s learning on the job," said Carl Tannenbaum, chief economist at Chicago-based Northern Trust, noting that with Trump’s transition from candidate to president he is now being counseled by more orthodox voices sensitive to what is needed to keep global bond markets on an even keel.

The president is also “very close” to naming a vice chair for banking regulation and filling another open seat that governs community banking on the Federal Reserve Board, US Treasury Secretary Steven Mnuchin said during the interview.

Economy


 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend