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KAI RYSSDAL: Traders voted with their wallets on B of A today. Shares were off 5 percent. The dollar, meanwhile, picked up a little bit of ground from its recent run of bad luck. Over the longer term, though, the greenback’s still down as low as it’s been in more than a year. Treasury Secretary Timothy Geithner was out talking up the importance of a strong dollar today. Yesterday, it was top White House advisor Larry Summers’ turn. But people who deal in the currency markets say it’s pretty obvious the White House is saying one thing, but doing another.
Here’s our senior business correspondent Bob Moon.
Bob Moon: Just how sincere are these repeated assertions of support for a strong dollar? Senior currency strategist Richard Franulovich chose his words carefully today when I reached him at Westpac Banking Corp.
Richard Franulovich: I would say that, for some time now, that’s regarded as being empty rhetoric — that there’s not much backing it.
At Merk Investments, chief investment officer Axel Merk’s reaction was more blunt.
Axel Merk: It’s a farce these days. Everybody’s laughing about it when he says that.
Merk says the administration is showing no real interest in propping up the dollar.
Merk: You have to back it up with policies that foster savings and investment. You do not back it up by printing trillions of dollars, by having enormous fiscal deficits.
Why would the government be quietly allowing the dollar to weaken? For one thing, it may be the simplest route to a recovery, if it makes our goods cheaper to sell abroad.
David Heuther is chief economist for the National Association of Manufacturers.
David Heuther: A more competitive dollar, where a dollar is not overvalued, in combination with a recovering global economy, allows U.S. manufacturers to take advantage of markets overseas and export our products. And it’s important for manufacturers, because about a quarter of what is made in the United States is exported overseas.
Investment adviser Axel Merk wonders if the government might be intentionally trying to use a little inflation to artificially boost home prices and jolt the economy.
Merk: It punishes anybody who is saving and encourages anybody who is speculating and is highly in debt. If that’s what you want as a policy maker, by all means pursue it, but then be frank about it.
But others say officials aren’t about to shout that from the rooftops, because doing so could risk causing the dollar to crash.
I’m Bob Moon for Marketplace.