Dollar drops to 3-year low after Mnuchin praises weak US currency

Dollar drops to 3-year low after Mnuchin praises weak US currency
© Greg Nash

The U.S. dollar dropped to a three-year low on Wednesday after Treasury Secretary Steven MnuchinSteven Terner MnuchinOn The Money: Cohen reportedly questioned over Trump dealings with Russia | Trump hails economy | Tells workers to 'start looking' if they want a better job | Internal poll shows tax law backfiring on GOP Trump announces tariffs on 0B in Chinese goods Trump: China tariff announcement to come Monday afternoon MORE praised the declining value of the currency in remarks at the World Economic Forum in Davos, Switzerland.

The ICE U.S. Dollar Index, which measures the strength of the dollar against six other currencies, dropped 0.5 percent to 89.66 on Wednesday, marking the first time in three years the index has fallen under 90 points. The previous low was 70.69 at the height of the U.S. financial crisis in March 2008.

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News of the dollar's drop comes just a day after Mnuchin told business leaders in Davos that a sinking dollar value "is good for us as it related to trade and opportunities."

"Longer-term, the strength of the dollar is a reflection of the strength of the U.S. economy and the fact that it is and will continue to be the primary currency in terms of the reserve currency," Mnuchin said Wednesday.

President TrumpDonald John TrumpTrump rallies in Nevada amid Supreme Court flurry: 'We're gonna get Brett' Trump: 'Good news' that Obama is campaigning again Trump boosts Heller, hammers 'Wacky Jacky' opponent in Nevada MORE has also spoken in favor of a weaker dollar to help boost exports for American manufacturers.

But some analysts say a weaker dollar could also hurt American consumers by forcing them to pay more for foreign goods.

"The reform momentum of the Trump administration has received another blow," said strategists at Morgan Stanley last year when the dollar fell to a 10-month low in July.

The euro, meanwhile, saw its value shoot up to a three-year high, trading at $1.2349 Wednesday, up from $1.2298 the day before.

The U.K.'s pound also saw a jump in value, trading at $1.4097 on Wednesday, up from $1.4 on Tuesday.