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US 'Actively Working' on Weaker Dollar: Fund Manager

The U.S. dollar rallied broadly on Thursday after a weekly jobless report triggered strength in the currency. Overall, the greenback has been very weak, sliding over 4 percent in the last three month. Axel Merk, manager at Merk Hard Currency Fund, shared his insights on the dollar.

“I believe that the government is actively working on a weaker dollar,” Merk told CNBC.

“When the Federal Reserve buys mortgage-backed securities, government bonds, we’re all excited about the low interest rates but these securities are now intentionally overvalued. Why would a rational investor buy these?”

Merk said domestic investors, in addition to non-Americans, are taking money overseas.

“And it is something the government wants, because the Fed thinks that the weaker dollar is not very inflationary,” he said. “I think that is wrong—but that’s what they’re trying to do, to try to reflate this economy.”

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Disclosures:

No immediate information was available for Merk or his firm.

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