Trump May Yet Take Action on the Strong Dollar

President Donald Trump said he has not ruled out measures to counter the dollar’s strength and noted that while it was a “beautiful thing” to have a strong currency, it makes U.S. exports more expensive.

“I didn’t say I’m not going to do something” on the dollar, Trump told reporters Friday in the Oval Office. “The dollar is very strong, the country’s very strong, the dollar—it’s a beautiful thing in one way, but it makes it harder to compete.”

Hours earlier, White House economic adviser Larry Kudlow said on CNBC that the administration had “ruled out any currency intervention” following a meeting with the president and his economic team.

Two people familiar with the matter said the meeting was focused on trade. Part of the agenda included a discussion of Trump’s concerns about the impact of a strong dollar, the people said.

During the Tuesday meeting—which the White House didn’t include on Trump’s public schedule—officials weighed proposals to publicly talk down the dollar’s value or weaken the greenback by intervening in currency markets using Treasury’s $94 billion exchange stabilization fund, the people said. They asked not to be identified discussing the confidential discussions.

The president has repeatedly raised concerns recently about the value of the dollar relative to trade competitors. He tweeted this month that Europe and China are playing a “big currency manipulation game” and called on the United States to “MATCH, or continue being the dummies.”

During the meeting, White House trade adviser and China hawk Peter Navarro was among the officials advocating for a currency intervention, the people said, while Kudlow and Treasury Secretary Steven Mnuchin opposed the idea.

But one person familiar with the meeting said Trump hasn’t made a firm decision not to intervene in currency markets at some point and that the option remains under discussion, a point that Trump’s subsequent comments in the Oval Office appear to corroborate.

The White House has held multiple meetings about the strength of the U.S. dollar and how to address it, several people familiar with the matter have said.

‘Dependable Dollar’

“Just in the past week, we had a meeting with the president and the economic principals, and we have ruled out any currency intervention,” Kudlow told CNBC in an interview on Friday. “The steady, reliable, dependable dollar is attracting money from all over the world.”

The Bloomberg dollar index extended its gains after Kudlow’s remarks, touching a one-month high.

Kudlow said Trump is concerned that other countries may be manipulating their currencies lower to try to gain short-term trade advantage. “That we do not like,” he said. “But it’s not a question about bringing down the dollar.”

Wall Street has produced a stream of analysis recently on the prospects of intervention, in which the White House instructs the Treasury to sell dollars to drive the greenback’s price down. Historically, the Federal Reserve has partnered with the Treasury in interventions, though it has policy independence and isn’t obliged to join in.

Mnuchin has called a strong dollar good for the U.S. economy in the long term and said he wouldn’t advocate for a weak-dollar policy in the near future.

“I do believe in a strong dollar, which signifies a strong U.S. economy, a strong stock market, and particularly because of the president’s economic policies, we have growth in the U.S. that has outpaced everywhere else,” Mnuchin said earlier this week.

— With assistance from Shawn Donnan.

Copyright 2019 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.