By George Prior
The furore over the Trump administration’s currency exploitation rhetoric is “naive” and “hypocritical,” affirms the boss of one of the world’s largest independent financial advisory organizations.
Nigel Green, founder and CEO of deVere Group, is speaking out after controversial comments given to the Financial Times by the U.S. President’s top trade adviser.
Mr Green observes: “Germany has become the latest country after Mexico, China and Japan, to be labelled a currency manipulator by the Trump administration, which seems determined to challenge trading partners that run large surpluses with the U.S.
“The Head of the new U.S. National Trade Council, Mr Navarro, insists that the Euro is like an “implicit” Deutsche Mark, whose ‘grossly’ low valuation gives Germany an unfair advantage over its trading partners, such as the U.S. and the EU.
“Whilst, he was criticizing Germany, President Trump was lambasting China and Japan for devaluing their currencies at a meeting with top pharmaceutical executives.”
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At that meeting, Mr Trump said: “They play the money market, they play the devaluation market, while we sit here like a bunch of dummies.”
The deVere CEO continues: “The rhetoric from the administration, and possibly the increasing likelihood of currency wars has, perhaps unsurprisingly, caused international furore.
“However, much of the indignation – on both sides – is naive and hypocritical.
“Whilst it may not be fair nor right, it can be sensibly assumed that currency manipulations do indeed take place around the world as central banks, quite rightly, look out for their jurisdictions’ best interest using all their tools that they have at their disposal, such as competitive devaluations. As such, the outcry following Mr Navarro’s statements seems somewhat naïve. It is also perhaps naïve to think that a Trump administration would not take this approach, given the previous rhetoric on this issue.
“It seems it is Mr Navarro’s perception that Germany’s economy has considerably benefitted from having a weak currency, the Euro. Like many, he argues that if it had remained with its stronger Deutsche Mark, its exports – which account for almost half of its economic output – would not have been nearly so robust, especially amongst other Eurozone countries.
“The opposite is true for other EU nations, such as Spain, who have suffered extra competitive burdens by having a currency that is stronger than their former ones, such as the peseta.”
Mr Green goes on to say: “On the other hand, there is a whiff of hypocrisy here too from the U.S. government.
“Indeed, the term ‘currency wars’ originated from the Brazilians after the Fed began their Quantitative Easing operations at the end of 2008 and the dollar weakened. The U.S. has, it can be argued, been as enthusiastic about using monetary policy to devalue as the Europeans and the Asians.”
deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.
