Yellen to spell out US stand against weaker greenback

Business | Agencies and Victor Zhong 19 Jan 2021

Janet Yellen, President-elect Joe Biden's pick to take over the Treasury, is expected to affirm US commitment to market-set currency rates when she testifies on Capitol Hill today, 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, citing Biden transition officials familiar with her preparation.

"The value of the US 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 US 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."

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 US trade and budget deficits widening further.

Yellen, who served as head of the US 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.

The report came as US dollar strengthened while the yuan fell to two-week low.

Meanwhile, Brian Deese, who will serve as director of Biden's National Economic Council, warned the US economy is "spiraling downward" and called for swift action to address vulnerabilities that the global pandemic has drawn into focus.

He said the incoming administration's US$1.9 trillion (HK$14.82 trillion) spending plan would generate "the kind of robust recovery we need."

Biden's proposal includes more direct payments to households, an expansion of jobless benefits, more money for state and local governments and an expansion of vaccinations and virus-testing programs.

"We are at a very precarious moment," Deese told Fox News. "The economy and the virus are spiraling downward. Now is the time to act."

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