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Yellen Dollar May be More Global one Mike Dolan

LONDON, Nov 27 Reuters Janet Yellens likely appointment as U.S. Treasury Secretary is unlikely to usher in a new exchangerate doctrine but may see more sensitivity toward the dollars global impact.

Assuming Presidentelect Joe Biden appoints the former Federal Reserve chair to be Treasury chief, as widely reported, her vast policymaking experience means few shocks are in store for markets that are already assuming she will be as much of a fiscal policy dove as she was a monetary one at the Fed.

But despite expected postelection congressional gridlock, investors remain wary that a combination of unprecedented fiscal and monetary stimulus, alongside a broadening recovery of the world economy and more risktaking could weaken the dollar dramatically as twin U.S. budget and trade deficits yawn.

Yellens appointment, they assume, only reinforces that picture as shes a clear advocate of more government investment spending, keeps close attention to fragmented labour markets and inequalities and presided over easymoney policy at the Fed.

While Fed policy is often the dominant determinant of the dollars exchange rate, the Treasury officially holds the reins of currency policy and would, for example, be required to sanction any explicit dollar orientation one way or another or indeed any outright open market intervention to achieve the aim.

So Yellens dollar stance potentially packs a punch alongside her past experience of, and future relationship with, the Fed over the broad…

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