In Steven Mnuchin’s nearly 6 hour confirmation hearing on Thursday, there was just one critical exchange lasting all of 90 or so seconds. It was Mnuchin’s response to a question from Senator Pat Toomey how he feels about a strong dollar. The question was predicated by Trump’s recent interview with the WSJ in which he voiced concern about the dollar’s recent appreciation, saying the currency was “too strong.”
Mnuchin’s response: the dollar is “very, very strong”, and “what you see is people from all over the world wanting to invest in the U.S. currency;” However, he hedged saying that while a strong dollar is great in long term, “it was meant to be that perhaps in the short term, the strength in the currency as a result of free markets and people wanting to invest here, may have had negative impacts on — on our ability in trade.“
Here is the exchange in full:
TOOMEY: Would you agree that many of the periods of strong economic growth that we’ve had in recent decades have corresponded to periods of a strong dollar and that often, if our economy is performing well and the world perceives our economy to have a bright future, the inevitable result will be a stronger dollar?
MNUCHIN: Let me just comment on that because I think that the U.S. currency has been the most attractive currency to be in – for very, very long periods of time. I think that it’s important and I think you see that now more than ever. The currency is very, very strong and what you see is people from all over the world wanting to invest in the U.S. currency. I think when the president-elect made a comment on the U.S. currency, it was not meant to be long-term comment.
It was meant to be that perhaps in the short term, the strength in the currency as a result of free markets and people wanting to invest here, may have had negative impacts on — on our ability in trade. But I agree with you, the long-term strength – over long periods of time, is important. And again, that’s a reflection of – I believe we have the most attractive investment environment in the world, and we just have to protect our U.S. companies so they’re not forced abroad.
On tape:
That said, as Bloomberg pointed out, earlier in the hearing, Mnuchin departed from the text of his prepared testimony to say he “will enforce trade policies that keep our currency strong on the world exchanges and create and protect American jobs.” The line in his written statement reads: “I will enforce these trade policies that keep and protect American jobs.”
Still, while readers may disagree, the market interpreted Mnuchin’s statement as agreement with Trump that the dollar may indeed be too strong, if only in the “short-term.”
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