Trump not trying to intervene in currency markets: US Treasury Secretary Steven Mnuchin

US Treasury Secretary Steven Mnuchin said both he and Trump fully support US Federal Reserve independence.
US Treasury Secretary Steven Mnuchin said both he and Trump fully support US Federal Reserve independence.PHOTO: REUTERS

BUENOS AIRES (REUTERS) - US President Donald Trump is not trying to influence currency markets, Treasury Secretary Steven Mnuchin said on Saturday (July 21), reiterating that a strong US dollar reflects a strong US economy and is in the United States' long-term interest.

Mnuchin told reporters in Buenos Aires for the G-20 meeting of finance ministers and central bank governors that both he and Trump fully support US Federal Reserve independence.

Trump has broken with precedent in recent days with comments criticising the US dollar's strength and the Fed's monetary policy, tweeting on Friday that the Fed's rate hikes take away the US "competitive edge" in exports.

"Let me be clear, this is not in any way the president trying to intervene in the currency markets whatsoever," Mnuchin said, adding that the United States does not try to manage its currency valuation.

Mnuchin said that both he and Trump fully support the Fed's independence and that he has "enormous confidence" in the job that Jerome Powell is doing as Fed chairman.

The Treasury chief also repeated his longstanding view that dollar strength is in the US interest long-term but that he does not comment on short-term dollar moves. He added, however, that the path of interest rates, and the dollar are determined by the US macroeconomic performance.

Mnuchin said he could not explain why President Trump made his comments about the Fed's rate path.

"Being a real estate person, real estate people obviously follow interest rates," Mnuchin said of Trump. "I just want to assure you that this was not intended to put pressure on the Fed or jeopardise the Fed's independence."

Mnuchin downplayed the notion that he is not holding a formal bilateral meeting with Chinese officials at the G-20 meeting, despite an escalating tariff war between the world's two largest economies.

He said that his normal counterpart, top Chinese economic adviser Liu He, is not attending the Buenos Aires meeting.

"If the right people were there, we'd be meeting," Mnuchin told Reuters in an interview on Friday.

He said that the Trump administration has been clear with the Chinese government about the specific steps that need to be taken for tariffs on US$34 billion worth of Chinese imports to be removed.

"Although the objective is to cut the trade deficit, the desire to do that is for them to open up their markets so that we can compete fairly, and we can grow exports," he said.

Thus far, Mnuchin said he has not seen a macroeconomic impact from the US tariffs on steel, aluminum and Chinese goods, along with retaliation from trading partners. But there have been microeconomic effects on individual businesses, he said, adding that the administration was closely monitoring these and looking at ways to help US farmers hurt by retaliatory tariffs.