♠ Posted by Emmanuel in Currencies
at 11/06/2010 09:55:00 AM
Oh man, I wish the weekend would have brought some blogging rest, but these American jokesters just keep upping the tragicomic quotient. With the US dollar dropping like a rock in recent months due to widespread anticipation of further quantitative easing from the Federal Reserve, I was utterly dumbfounded when one US Secretary Tim Geithner had the temerity to reiterate 'strong dollar policy' at a gathering of APEC finance ministers in Kyoto, Japan just a few hours ago:Asked if he will push for a 4 percent current account target to be included in the G20 communique at Seoul: "That is not our intention. What our intention is, is to keep trying to build support for this and to allow the experts to do the detailed hard work, to build a framework that people will have some confidence in over time. There's nothing on the table except for 'indicative guidelines' ...Having been laughed out of China before, I guess the thankless job of being US treasury secretary includes reiterating 'strong dollar policy' with a straight face despite all evidence to the contrary. In essence, dollar depreciation is what can be done but not said as there is really nothing to suggest the US is serious about implementing policies to stop its ongoing slide. If you don't put these Americans in their place, they'll make a joke out of you, too.
"I'm happy to reaffirm again that a strong dollar is in our interest as a country, it's very important to the United States, and we will never use our currency as a tool to gain competitive advantage [my emphasis]. "And we recognise that the dollar's role in the monetary system conveys special burdens, responsibilities on the United States for broader global responsibilities and we take those responsibilities very seriously and we are as you know working very hard to make sure we're improving the underlying fundamentals of the U.S. economy."
UPDATE: Looking back, there tends to be an upswing in "strong dollar policy" statements when there are noticeable drops in the US dollar index. I'll try and plot treasury secretary "strong dollar policy" pronouncements against the US dollar index and see what can be explained.
