Federal Reserve Chair Janet Yellen warned Congress against a bid to crack down on currency cheats and said adding currency rules to trade deals could hobble monetary policy. Lawmakers have introduced legislation allowing firms to seek compensation for currency weakness overseas and some are also fighting to include a currency chapter in upcoming trade deals such as the 12-nation Trans-Pacific Partnership (TPP). Yellen said while it was inappropriate to seek an edge over trading partners by devaluing currencies, she would “really worry greatly” about including sanctions against currency manipulation in trade deals. Easy monetary policy to stimulate growth, including the Fed’s low ultra-low interest rates and massive asset purchases, could weaken exchange rates but was not currency manipulation, Yellen said. “I would really be concerned by a regime that would introduce sanctions for currency manipulation into trade agreements when it could be the case that it would hamper or even hobble monetary policy,” Yellen told a Senate committee hearing after a question from Republican Bob Corker. Senior Treasury officials have also warned against using trade deals as a tool to tackle currency manipulation, saying doing so could undermine diplomatic efforts at the Group of 20 and other international groupings. But Democratic Senator Sherrod Brown, one of a group of lawmakers behind bipartisan legislation to categorize currency weakening as an illegal trade subsidy, said help was needed for manufacturers whose competitors benefited from weak currencies, making their exports cheaper. U.S. automakers such as Ford Motor Co are pushing hard to include currencies in the nearly-completed TPP, which includes Japan, one of the world’s top car exporters, a move some fear could derail the deal. Michigan Representative Sander Levin, the top Democrat on the House Committee on Ways and Means, said his proposal for a currency test in the TPP would not catch the United States as it defined currency manipulation as government intervention in foreign exchange markets. (Reuters)