During the Senate Finance Committee hearing this Tuesday, upcoming Treasury Secretary Janet Yellen reasserted commitment to market-set currency rate.
After being asked about the dollar and market-determined exchange rate, Yellen responded by saying that “America does not want a weaker dollar to get a competitive advantage, and we should be against other countries doing so as well.”
These words do not surprise anyone as investors and markets were anticipating Yellen to stress this point within her testimony.
“I believe in exchange rates that are market-determined. The price of currencies should be up to the markets,” Yellen said.
The Treasury Secretary nominee went on to say she would work with Biden to object to other countries who attempt to claim a competitive advantage in trade by manipulating their currency.
She said that such targeting of exchange rates for commercial advantage should not be allowed.
“I believe in a strong American economy that gives its citizens good jobs. Stability in our financial system is good for all of us,” Yellen said.
If she is confirmed, Yellen will replace Treasury Secretary Mnuchin and will make history as the first female treasury secretary.
Gold kept its daily gains after her comments, with much of the response of investors already priced in. The Feb. Comex gold futures were last at daily highs of $1,841.30, an increase of 0.62% for the day.
Yellen also sounded alarms over the risk to the economy if officials do nothing, saying that it is better to “go big” right now.
“Without further steps, we risk a deeper, more painstaking recession — and long-term damage of the economy later on,” she said. “Neither President-elect Biden, nor myself, present this relief deal without an acknowledgment of the nation’s debt crisis. But as of this moment, with interest rates at historic lows, the smartest move is to act big.”
Getting folks back to work is our initial task, Yellen stated. The second task is to rebuild our economy to generate more prosperity for everyone.
The pandemic triggered devastation, she added. “Eighteen million unemployed people are being paid every week. Food banks are running low. The damage has been far-reaching, and as President-elect Biden said last week, our response must be as well,” she said.