The US dollar is stable and President Donald Trump believes in a free-floating currency, the White House has said after the Treasury Secretary in Davos said a weaker dollar could be good for America.
Following Treasury Secretary Steven Mnuchin's comments, the US dollar slumped to a three-year low.
"Yeah, as I said, we also believe in a free-floating currency," White House Press Secretary Sarah Sanders told reporters when asked about the drop-in value of dollar yesterday.
"We still very strongly believe that we have a stable dollar and that's a good thing and that's why it's the reserve currency. I don't have anything else further to add on that front," Sanders said when asked about Mnuchin's remarks.
At a news briefing in Davos, Mnuchin told reporters yesterday: "Obviously a weaker dollar is good for us as it relates to trade and opportunities.
"A weaker dollar is good for trade. In the longer term, a stronger dollar is a reflection of the strength of the US economy".
Trump would address the World Economic Forum (WEF) meeting at Davos tomorrow.
"Mnuchin's words quickly pushed the currency to its lowest level in three years and spurred the market to assess what next steps the Trump administration would take to lower the country's USD 500 billion trade deficit, a long-stated policy goal," The wall Street Journal reported.
According to the daily, a weaker dollar makes US goods cheaper to foreign markets, and can especially be seen as a boost for multinationals that derive a large portion of their income from outside the country.
The risk of a weaker dollar is that it could undermine confidence in a wide swath of US assets, including the US Treasury market, it added.
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