Tuesday, June 25, 2019

Bretton Woods part 2?

Don’t expect much of a respite from U.S. officials’ squawking about the dollar, even as the currency is near a three-month low in the lead-up to this week’s pivotal Group-of-20 summit.
President Donald Trump believes the dollar is too strong, a senior administration official said Tuesday. Last week, Trump accused Europe and China of weakening their currencies to gain a competitive advantage. Wall Street banks are even starting to ponder the risk that the U.S. could seek to drive the dollar lower. And with Democratic presidential candidate Elizabeth Warren proposing “actively managing” the currency, its value promises to be a topic deep into the election cycle.
Finance ministers and central bankers this month agreedthat a currency war is in no one’s interest. However, since a falling exchange rate can offset the impact of tariffs against a country -- something Trump himself has acknowledged -- currencies are a necessary component of trade talks, says Goldman Sachs Group Inc.’s Zach Pandl. That means foreign exchange is bound to be a hot topic at the G-20 meeting in Osaka.

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