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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

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A U.S. airstrike in northwest Syria on Friday killed senior al-Qaeda leader Abdul Hamid al-Matar, U.S. Central Command said in a statement.

Why it matters: Syria serves as a "safe haven" for the extremist group to plan external operations, according to U.S. Army Maj. John Rigsbee.

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Florida businessman Lev Parnas was convicted Friday on charges of conspiracy to make foreign contributions to political campaigns, according to multiple outlets.

Why it matters: Prosecutors said Parnas, then an associate of former President Donald Trump's personal lawyer Rudy Giuliani, funneled over $150,000 from a Russian businessman into U.S. campaigns as part of an effort to land licenses in the U.S.'s legal cannabis industry.

Supreme Court agrees to hear challenges to Texas abortion law

Photo: Saul Loeb/AFP via Getty Images

The Supreme Court on Friday agreed to hear two cases challenging Texas' abortion law, which bans the procedure as soon as six weeks into pregnancy, but left the law in place in the meantime.

Why it matters: The court is moving extraordinarily fast on the Texas cases, compressing into just a few days a process that normally takes months. And that schedule means the court will take up Texas' ban a month before it hears another major abortion case — a challenge to Mississippi's own 2018 ban on abortions after 15 weeks.