CHANTILLY, France (Reuters) - U.S. Treasury Secretary Steven Mnuchin said on Thursday that there have been no changes to policies on the Treasury’s $94.5 billion (£75.7 billion) Exchange Stabilization Fund despite President Donald Trump’s desire for a weaker U.S. currency.
Mnuchin declined to comment on the dollar’s current valuation both in a Reuters interview and during a news conference at a G7 finance ministers meeting in France.
Trump has frequently voiced a desire for a lower dollar to counteract what he views as actions by other countries to weaken their currencies. The Exchange Stabilization Fund, created during the 1930s Great Depression, is viewed by some analysts as a possible tool to help engineer a devaluation..
But Mnuchin told Reuters that the main purpose of the exchange fund is to help minimize “distress on certain currencies as a result of market forces” or other pressures.
Typically, the fund has been used in times of policy coordination with other countries, he added.
“That’s the main purpose of the fund,” Mnuchin said. “On an ongoing basis we always look at what the fund can be used for in different alternatives, but as of now there is no change in policy,” Mnuchin said.
A U.S. Treasury spokeswoman later said that Treasury’s overall dollar policy is unchanged. Mnuchin in the past has called for a stable dollar.
But the dollar, which is near multi-decade highs against major currencies, is about 6-12% overvalued compared to U.S. economic fundamentals, the International Monetary Fund said on Wednesday.
The seldom-used Exchange Stabilization Fund has mainly been tapped in crisis situations. It was last used in 2011 during a coordinated intervention by G7 central banks to tamp down a sharp spike in the Japanese yen after an earthquake and tsunami damaged a nuclear power plant on Japan’s coast.
The U.S. Treasury pledged $50 billion in assets from the Fund in 2008 to insure U.S. money market mutual funds at the depth of that year’s financial crisis, although no payouts were made. Prior to that, the Treasury used the fund following the 1994 Mexican economic crisis to help stabilize the Mexican peso.
Additional reporting by Jason Lange in Washington; Editing by Chizu Nomiyama