Cautious in pandemic, Washington spares currency manipulators

Posted on Dec. 2021 at 4:00 PMUpdated Dec. 7 2021 at 16:07

The United States has too strong a currency and some of its trading partners, particularly in Asia, are no strangers to it. To strengthen their competitiveness, they do not hesitate to intervene in the market by buying dollars against their currencies. In the second annual review of the exchange rate policy of its trading partners, the world’s leading power notes that the dollar is 9% higher than its long-term average (20 years). It is close to its record, reached in 2020 against a basket of emerging currencies (excluding China).

Unlike the Trump administration, which entered fully into the trade war (customs duties, etc.), the Democrats still favor dialogue and persuasion at this stage in an exceptional environment marked by the Covid crisis. Washington wants to avoid a trade war as the pandemic once again threatens the global and US economy. It gave rise to exceptional monetary policies which led to currency distortions and volatility.

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