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According to various media reports, President Obama could nominate Jack Lew as a replacement for Tim Geithner as early tomorrow. For the foreign exchange market, the choice Treasury Secretary is extremely important because contrary to what some people may believe, exchange rate policy is determined by the Treasury and not the central bank. The Treasury decides whether currency intervention is necessary and whether certain countries should be branded as currency manipulators. Of course, the Treasury will consult with the Federal Reserve on intervention, but the central bank simply acts as an agent that executes the Treasury's decisions. For these reasons and many other including responsibility for Fiscal Policy, President Obama's choice of Treasury Secretary will be extremely important for forex traders.
