When Talking About the Dollar, Boring Is Best

It may have been a storm in a tea cup -- or possibly a hot chocolate, since it happened on the slopes of Davos. But the kerfuffle over Steve Mnuchin’s comments around the dollar last week show that the U.S. administration still has much to learn when it comes to the etiquette of economic policy making.

The Treasury Secretary is probably right in saying that his comments that a weak dollar would be good for U.S. trade in the short-term were taken out of context. However, they did spike markets, sending the dollar index to the lowest level in three years. There is a reason why Treasury secretaries since Robert Rubin have repeated the same line over and over -- that they prefer a strong dollar -- without making caveats. Boring can be good, as it avoids unnecessary fluctuations.