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FT: “ US Treasury added Ireland, Italy and Germany to its currency manipulator watchlist.. alongside China“ “ rate cuts are set to mitigate the economic impact of the dollar’s appreciation, Fed policymakers said in minutes of their latest meeting” ft.com/content/44be14… 1/n
Dangerous “currency wars” language, specially by Trump. This is against all the principles consolidated among the G7: currencies fluctuate in the forex market; macroeconomic policies are conducted with only domestic economy goals; no unilateral forex market interventions etc. 2/n
CBs are allowed to conduct their policies focused on domestic targets without being accused of manipulating the currency just because any monetary measure has potential forex implications. No model can anyhow predict well what happens to exchange rates. 3/n
The G7, with the help of the IMF calculations of equilibrium rates ( however fallible is the exercise) discuss the issues and try to keep orderly developments without market distortions. These sensitive arrangements are crucial for the world economy 4/n
Improvements in the system are desirable but very difficult. But, if Trump weaponizes the dollar (after having weaponized trade policy), the rest of the world would have to start looking for changes however long they may take to materialize. Trump is harming the dollar 5/n
The US cannot boast about having the best and strongest growing economy and pretend that the dollar should be depreciating and if that is not happening it is because other countries are „manipulating“ their currencies 6/6
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