Treasury Secretary Steven Mnuchin rattled currency markets yesterday when he said “a weaker dollar is good" — a break in the habit of U.S. officials to publicly advocate for a "strong" dollar.

The facts
Expand chart
Data: U.S. Federal Reserve; Chart: Andrew Witherspoon / Axios
Why it matters

The dollar hit the lowest exchange mark in three years following Mnuchin's comments, after a slow drop over the past few months. While historically, U.S. Treasury Secretaries have spent more time praising a stronger dollar than a weaker dollar, both Mnuchin and President Trump have mentioned that a strong dollar can be harmful to the economy.

The breakdown
  • The strength or weakness of the dollar has the biggest impact on international trade.
  • The Federal Reserve's nominal broad index (used in the chart above) provides a weighted average of the dollar's foreign exchange values against the currencies of several major trade partners, including the Euro Area, Canada, Japan, Mexico, China, United Kingdom and others.
  • The strength of the dollar doesn't necessarily correlate to the state of the U.S. economy because it's always in comparison to the state of foreign economies. Even during the financial crisis of 2008, the U.S. dollar's exchange rate actually rose as it was still stronger by comparison to other countries.

Why a weak dollar could be good: It would make U.S. exports cheaper and easier to sell around the world. This is why Trump has often berated China for artificially keeping their currency "weak," in order to sell more goods at lower prices to foreign purchasers.

Why a weak dollar could be bad: The U.S. would have to pay more for imports making many goods more expensive for U.S. consumers. And as former Treasury Secretary Larry Summers wrote in the Financial Times, a weak dollar could lead to higher interest rates in the U.S. and currency wars with other countries as they compete to have the cheapest currencies.

Bottom line: today in Davos, Switzerland, Mnuchin clarified his dollar comments:

“There are benefits of where the dollar is and there are costs of where the dollar is ... I thought my comment on the dollar was actually quite clear ... It was balanced and consistent with what I said before, which is we are not concerned with where the dollar is in the short term.”
— Mnuchin in Davos, according to Bloomberg News
Expand chart
Data: U.S. Federal Reserve; Chart: Andrew Witherspoon / Axios

Go deeper

Updated 17 mins ago - World

Hong Kong media tycoon Jimmy Lai arrested under national security law

Media tycoon Jimmy Lai at the Next Digital offices in Hong Kong in June. Photo: Anthony Wallace/AFP via Getty Images

Hong Kong pro-democracy activist Jimmy Lai has been arrested for "collusion with foreign powers," said Mark Simon, an executive at the tycoon's media firm Next Digital Monday morning local time.

Why it matters: He was arrested under the new national security law that gives Beijing more powers over the former British colony. Lai is the most prominent person arrested under the law, which prompted the U.S. to sanction Chinese officials, including Hong Kong leader Carrie Lam, over Beijing's efforts to strip the territory of its autonomy.

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 8:30 p.m. ET: 19,769,560— Total deaths: 729,351 — Total recoveries — 12,030,061Map.
  2. U.S.: Total confirmed cases as of 8:30 p.m. ET: 5,041,573 — Total deaths: 162,913 — Total recoveries: 1,656,864 — Total tests: 61,792,571Map.
  3. Politics: Pelosi says states don't have the funds to comply with Trump's executive order on unemployment — Mnuchin says Trump executive orders were cleared by Justice Department.
  4. States: New York reports lowest rate of positive coronavirus test results since pandemic began
  5. Public health: Ex-FDA head: U.S. will "definitely" see 200,000 to 300,000 virus deaths by end of 2020. 
  6. Schools: Nine test positive at Georgia school where photo showing packed hallway went viral — How back-to-school is playing out in the South as coronavirus rages on.

New York reports new low positive coronavirus test rate

People physically distancing at tables in New York City's Times Square in June. Photo: Johannes Eisele/AFP via Getty Images

New York Gov. Andrew Cuomo (D) announced Sunday 515 people, or 0.78% of those tested, returned a positive reading for COVID-19 the previous day.

Why it matters: It's the lowest single-day positive rate since the start of the pandemic. It's another sign that the state that was once a global coronavirus epicenter is curbing the spread of the virus. "Our daily numbers remain low and steady, despite increasing infection rates across the country, and even in our region," Cuomo said in a statement. "But we must not become complacent: Everyone should continue to wear their masks and socially distance."

Go deeper: Cuomo says all New York schools can reopen for in-person learning