Treasury overlooks the true culprit behind US dollar strength
By Michael Stumo, opinion contributor — 06/01/19 03:00 PM EDT After a long delay, the Treasury Department just released its latest semi-annual report on global currency exchange policies. The congressionally mandated report provides an assessment of whether foreign countries are undervaluing their currencies to gain a trade advantage.
The major takeaway from the report is that Treasury has expanded the list of countries it is monitoring for exchange rate abuses. However, the department repeated its longstanding practice — and once again found no currency “manipulation†by America’s trade competitors.
In other words, Treasury believes that foreign central banks are not acting to push the U.S. dollar’s value up to noncompetitive levels.
Treasury is barking up the wrong tree, however. In the current market, the dollar is indeed being driven up, but by private capital inflows, not central banks — and it’s making U.S. exports too expensive in global markets.
Conversely, the currencies of America’s chief competitors — Japan, China and Europe — are too low. The result is that American-made cars, airplanes and other manufactured goods are getting priced out of the market through no fault of domestic U.S. companies.
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https://thehill.com/opinion/finance/446354-treasury-overlooks-the-true-culprit-behind-us-dollar-strength
