Princeton professor and former Fed Vice Chairman Alan Blinder told CNBC that political meddling to weaken the dollar could 'kick off a real swoon.'
"The problem with talking down the dollar is you may get more than you bargained for," Blinder said on CNBC's "Wall Street analysts now see an increased chance ofthrough the Trump administration verbally abandoning the traditional strong dollar policy or even possibly buying other currencies. Earlier this month, Trump said the U.S. should "match" alleged currency manipulation by China and Europe.
Blinder said that some talk about a weaker dollar could have only a minor impact, but actions such as directing the Treasury Department to weaken the currency would be a different story. "A small deviation from the orthodoxy, which is 'never talk about the dollar,' probably doesn't hurt very much," Blinder said. "But if you keep it up and get serious about it, and especially back it up with actions ... then you could be creating a problem.", which measures the value of the greenback relative to a basket of other currencies, has risen more than 3% over the past 12 months.
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