Janet Yellen, President-elect Joe Biden’s pick to take over the U.S. Treasury, is expected to affirm the United States’ commitment to market-set currency rates when she testifies on Capitol Hill on Tuesday, the Wall Street Journal reported.
The Treasury secretary nominee will make clear at a Senate confirmation hearing that the United States does not seek a weaker dollar, the newspaper reported https://on.wsj.com/35NaV8W on Sunday, citing Biden transition officials familiar with her preparation.
“The value of the U.S. dollar and other currencies should be determined by markets. Markets adjust to reflect variations in economic performance and generally facilitate adjustments in the global economy,” Yellen will say according to the report, if asked about the incoming administration’s dollar policy.
“The United States doesn’t seek a weaker currency to gain competitive advantage,” she is prepared to say, according to the WSJ. “We should oppose attempts by other countries to do so.”
A Biden transition team official did not respond to a request for comment about Yellen’s testimony. Biden, a Democrat, takes office on Wednesday.
The policy outlined by Yellen would be a return to a traditional posture after Republican President Donald Trump railed against the dollar’s strength for years, saying it gave other countries a competitive advantage.
It also comes with investors heavily short dollars – with the value of bets against the greenback the highest in almost a decade – partly in anticipation of U.S. trade and budget deficits widening further under the new administration.
“(Yellen) is kind of signaling a hands-off approach, which is reverting to what had traditionally been the case before Trump,” said Bank of Singapore analyst Moh Siong Sim, who figures the dollar could continue to decline.
“I think the dollar and financial markets will be less of a focus, in terms of verbal rhetoric, for the Treasury secretary and the key focus will be getting policy implemented in terms of fiscal relief.”
The dollar has bounced in recent weeks but suffered its worst annual loss since 2017 last year. Yellen, who served as head of the U.S. Federal Reserve from 2014 to 2018, is expected to win confirmation in the Senate and will likely be one of the first Biden Cabinet picks to be confirmed.
(Reporting by Kanishka Singh in Bengaluru and Trevor Hunnicutt in Wilmington, Delaware; Additional reporting by Ira Iosebashvili and Tom Westbrook ; Editing by Nick Zieminski, Peter Cooney and Gerry Doyle)