Trump adviser warns of risks to U.S. economy of strong dollar

DAVOS, Switzerland (Reuters) – A senior adviser to Donald Trump warned with regard to the risks of a greater dollar at the World Economic Forum , saying it could possibly make it near impossible for the president-elect to give on his promise to revitalize the U.S. economy.

“We will need to be careful for the rising currency, not only for because of what is happening internationally it also will have a visible impact internally towards the United States additionally,” Anthony Scaramucci, who will develop into a White House adviser and public liaison to government agencies and businesses, said in Davos.

Hedge fund manager Scaramucci’s views were echoed by other bankers and investors, including David Rubenstein for the Carlyle Group (CG.O), who warned of one’s repeat of the 1990s emerging markets crisis which forced Bill Clinton to bail out Mexico.

Rubenstein estimated there was $4.5 trillion in emerging market corporate debt that has been dollar-denominated. If the dollar, and that is already perched at 14-year highs compared to the euro, continued to elevate, this would squeeze countries which use borrowed in dollars, possible even forcing more bailouts.

“At this time we are in times where the currency adjusted up so strong, the dollar, we do run the risk of potentially another Mexican style crisis,” Rubenstein said.

“Eventually if this trend continues hard have to be some intervention I think to keep the dollar from being too strong,” he added.

Axel Weber, the chairman of Swiss bank UBS (UBSG.S) and a previous president from the German Bundesbank, predicted that the dollar would continue to rise for the next 10-15 months.