Yellen says dollar strength ‘logical outcome’ of policy stances

US Treasury Secretary Janet Yellen said the strength of the dollar is the “logical outcome” of different monetary policy stances globally and that its value should be set by the market.

“A market determined value of the dollar is in America’s interest,” Yellen said Tuesday in an interview with CNBC, when asked about the possibility that authorities might need to intervene to curb its rise. “The currency movements are a logical outcome of different policy stances.”

Responding to criticism that the dollar’s surge threatens emerging economies, Yellen said that the greenback’s strength reflects “appropriate” policies.

The Federal Reserve’s most aggressive monetary tightening since the early 1980s has sent the US currency surging, impacting developing countries that borrowed heavily in greenbacks and raising the cost of dollar-priced energy and other imports.

Yellen was also asked about recent market volatility after the UK announced billions in unfunded tax cuts in an effort to boost growth, which were seen running counter to tighter monetary policy to cool inflation.

“My general view is that, and this is how I feel for the United States, is that, at a time when monetary policy is tightening, fiscal policy should have a stance that it complements that,” she said.