Treasury Secretary Steven Mnuchin landed in Buenos Aires for a summit on Friday with the risk of a currency war in the air. He left two days later with the world’s top finance chiefs feeling much more at ease.
Mnuchin over roughly 48 hours tamped down concern of any shift in currency policy, hammering home in a press conference early Saturday that America’s longstanding commitment to a strong greenback remains intact. He also said the U.S. isn’t trying to intervene in the dollar market.
His comments at the Group of 20 nations summit followed tweets on Friday from President Donald Trump, who accused China and the euro area of manipulating their currencies while complaining that a rising dollar is hurting the U.S. His comments caused the greenback on Friday to weaken the most in four months as investors feared Trump was embarking on a new era of jawboning the currency to boost exports.
But by the end of the G-20 meetings, few central bankers or finance ministers were talking about a potential currency war in which nations compete to devalue their exchange rates. “We didn’t discuss the topic,” Spain’s Economy Minister Nadia Calvino told reporters Sunday afternoon.
G-20 participants instead focused much of their attention on a global trade conflict, as tit-for-tat tariffs between the U.S. and its partners threaten to undermine business confidence, disrupt global supply chains and elevate consumer prices. International Monetary Fund Managing Director Christine Lagarde also raised alarms about the disputes, urging G-20 nations to resolve disagreements via international cooperation.
G-20 nations published a final communique at the close of the summit that warned risks to the world economy have increased amid heightened trade tensions.
After more than a dozen bilateral meetings, plenary sessions and a working dinner at a local steak house, Mnuchin said it had been simple to reach agreement on the group’s final statement. “It was the easiest communique—it was finished yesterday,” he said Sunday.
Despite his diplomacy on the currency front, Mnuchin didn’t soften the administration’s stance on trade and its tough rhetoric against Beijing. As part of its push to rebalance world trade in America’s favor, the White House has slapped tariffs on global steel and aluminum imports as well as $34 billion of Chinese goods.
Mnuchin told reporters Saturday the White House would continue to pressure countries to open their markets to American exports and investments, and questioned whether the yuan’s decline was the result of market forces or government interference. Mnuchin said the U.S. will closely monitor China’s exchange rate, which has fallen more than any major currency in the past month.
The U.S. position on trade attracted sympathy from some participants of the G-20 meetings, with Australia’s Treasurer Scott Morrison saying the Americans have understandable complaints. “There are some grievances that have been around for a decade and the tit-for-tat announcements on tariffs were an unconventional way to resolve those issues,” he said on the sidelines of the summit.
The Europeans were less understanding and voiced support for a unified position in confronting the U.S. The summit wrapped up just days before European Commission President Jean-Claude Juncker travels to Washington to discuss trade issues, including U.S. threats to slap tariffs on automobile imports. French Finance Minister Bruno Le Maire said progress is unlikely as long as the U.S. tries to use duties as leverage.
“We refuse to negotiate with a gun to the head,” he said.