America's currency confusion

Washington

FOR MORE than two decades, American administrations, both Democratic and Republican, have followed the same currency playbook. They backed free floating, especially for the US, Europe and Japan, without intervention. They pressed G-3 officials not to comment on currency market developments. When unavoidably pressed to do so, they stated rote support for a "strong dollar". And they focused on curbing excessive global imbalances, especially surpluses.

Key motivations behind bipartisan dollar policy have been US interests in avoiding excessive reliance on America as the engine for world growth and in resisting protectionist pressures.