Gold price maintains daily gains as Yellen says 'U.S. does not seek weaker dollar'
(Kitco News) Treasury Secretary nominee Janet Yellen confirmed U.S. commitment to market-set currency rate during her testimony in front of the Senate Finance Committee on Tuesday.
When asked about the U.S. dollar and market-determined exchange rate if confirmed by the Senate, Yellen said that the "U.S. does not seek a weaker currency to gain competitive advantage, and we should oppose attempts by other countries to do so."
These comments do not come as a surprise as markets were widely expecting Yellen to highlight this topic during her testimony.
"I believe in the market-determined exchange rates. The value of currencies should be determined by markets," Yellen clarified.
The Treasury Secretary nominee also noted that she would work with President-elect Joe Biden will oppose other countries who try to gain an advantage in trade by using currency manipulation.
She added that targeting exchange rates for commercial advantage is unacceptable.
"I believe in a strong U.S. economy that delivers goods jobs for Americans. Stability in U.S. financial system is good for America," Yellen said.
If confirmed, Yellen will replace Treasury Secretary Steven Mnuchin and will be the first female treasury secretary in U.S. history.
Gold maintained its daily gains following the comments, with most of the statements already priced in. The February Comex gold futures were last trading near daily highs at $1,841.30, up 0.62% on the day.
Yellen also warned that there is a risk to the economy if the government does nothing, noting that it is better to "act big" now.
"Without further action, we risk a longer, more painful recession now — and long-term scarring of the economy later," she said. "Neither the president-elect, nor I, propose this relief package without an appreciation for the country's debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big."
Getting people back to work is our first task, Yellen said. The second task is rebuilding the economy to create more prosperity.
The pandemic caused widespread devastation, she added. "Eighteen million unemployment insurance claims are being paid every week. Food bank shelves are going empty. The damage has been sweeping, and as the president-elect said last Thursday, our response must be too," she said.