(Bloomberg) -- Janet Yellen said the U.S. won’t seek a weaker exchange rate to gain advantage over other nations, and said if confirmed as Treasury secretary that she will work against any moves by other countries to pursue such a strategy.
“The United States does not seek a weaker currency to gain competitive advantage and we should oppose attempts by other countries to do so,” Yellen said Tuesday at the Senate Finance Committee’s confirmation hearing for her coming formal nomination as Treasury chief.
Yellen said she would work “to oppose any and all attempts by foreign countries to artificially manipulate currency values to gain advantage in trade.”
She also said that the Biden administration will be prepared to take on China over what she said was its theft of intellectual property, dumping of products on global markets and adoption of subsidies for its businesses.
Yellen didn’t explicitly refer to the strong dollar policy that was adopted during the Clinton administration and was effectively abandoned by President Donald Trump.
At the same time, Yellen avoided citing benefits of a weaker dollar, something that Trump and Treasury Secretary Steven Mnuchin had highlighted, especially in terms of exports and purchasing power. Mnuchin has said that an “excessively strong” dollar could hurt the economy.
“I view her remarks as a reiteration of the traditional policy -- what was done, not what was said. I think there was excessive market/media focus on the ‘strong dollar’ language,” said Mark Sobel, a former U.S. Treasury official now at the Official Monetary and Financial Institutions Forum. “The dollar policy was traditionally always about letting the markets decide and keeping official views out of it, except in rare circumstances.”
Former Treasury Secretary Larry Summers last year advised whoever the next secretary is that favoring a strong dollar would be “prudent” and that it would be “unwise to appear actively devaluationist or indifferent to the dollar.”
The Trump team in 2019 didn’t rule out intervening in currency markets to weaken the greenback, a move that would have violated G-20 commitments.