The White House briefly looked into ways to weaken the dollar. But Janet Yellen told us the Fed wouldn’t have to participate in such an intervention.

Federal Reserve Chair Janet Yellen holds a news conference following day two of the Federal Open Market Committee (FOMC) meeting in Washington, U.S., December 14, 2016.

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Federal Reserve Chair Janet Yellen holds a news conference following day two of the Federal Open Market Committee (FOMC) meeting in Washington, U.S., December 14, 2016.
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REUTERS/Gary Cameron
  • The White House last month briefly considered ways to weaken the dollar, which has increasingly frustrated President Donald Trump by making exports relatively costly abroad.
  • Former Federal Reserve Chair Janet Yellen said Wednesday the central bank would not be legally required to participate in potential US efforts to intervene on the currency.
  • “That would be, I think, a decision they would have to make,” Yellen told Markets Insider of equal intervention with the Treasury.
  • Visit Markets Insider for more stories.

Former Federal Reserve Chair Janet Yellen said Wednesday the central bank would not be legally required to participate in potential US efforts to intervene on the dollar.

The White House last month briefly considered ways to weaken the currency, which has increasingly frustrated President Donald Trump by making exports relatively costly abroad. While Yellen told Markets Insider in an exclusive interview that she did not want to weigh in on current developments, she said the central bank has traditionally followed currency interventions when they occurred.

“The Fed acts as an agent of the Treasury in carrying out intervention,” Yellen said. “It also typically participates an equal amount for its own account. But that’s not anything that’s required by law. So that would be, I think, a decision they would have to make.”

White House economic adviser Larry Kudlow said in late July that the administration had decided not to take steps to weaken the dollar. But Trump cast doubt on that assertion the same day, saying he “could do that in two seconds” if he wanted to. The White House did not offer comment Wednesday afternoon.

Such an action by the US would be precluded by commitments among economic powers and with the International Monetary Fund. On Monday, the Treasury Department designated China as a currency manipulator after the yuan breached the psychologically important level of 7 against the dollar.

“China is intent on continuing to receive the hundreds of Billions of Dollars they have been taking from the U.S. with unfair trade practices and currency manipulation,” Trump wrote on Twitter on Monday. “So one-sided, it should have been stopped many years ago!”

Read more: Trump just tapped former economic adviser Judy Shelton for a Federal Reserve seat. She’s a fierce critic of the central bank who sees a gray area on its independence from the administration.

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