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US administration defends strong dollar as it plunges
WASHINGTON
Petroleumworld.com, Mar 14, 2008
US administration officials on Thursday scrambled to reassure markets that Washington maintained a strong-dollar policy even as the greenback plunged against the euro, yen and other major currencies.
The White House on Thursday said President George W. Bush's comment this week was consistent with Washington's longstanding policy.
Asked about Bush's comment in an interview on Wednesday that he wanted a stronger dollar, White House spokesman Tony Fratto replied: "He was not changing policies."
"It wasn't a departure, the president has said many times we have a strong-dollar policy and over time the economic fundamentals will be reflected in the dollar's value," the spokesman said.
In an interview with PBS television on Wednesday, Bush was asked whether he wanted a stronger dollar. "I would, absolutely," he replied.The president noted that the plunging dollar had raised costs for US consumers, making imports more expensive, particularly oil.
With US economic growth in recent months bolstered by rising exports on the back of the sinking dollar, some analysts have questioned whether the US administration is content to look the other way.
Separately, Treasury Secretary Henry Paulson reiterated that a strong dollar "is in our national interest."
The dollar dropped to another record low against the euro, which rose as high as 1.5645 dollars. The greenback fell below 100 yen for the first time in 12 years.
The dollar has slumped in value on foreign exchange markets in recent months amid mounting concerns that the world's largest economy could be falling into a recession.
" This president has had his Treasury secretary saying he is in favor of the strong dollar the whole time he has been in office," said Robert Brusca, an analyst at FAO Economics.
Brusca said the real weighted dollar hit its peak six months after Bush took office in January 2001 and has been declining since then, despite the strong-dollar policy.
"This does not sound like it is a policy that has teeth," he said.
Fratto, the White House spokesman, said the president was "focused on economic fundamentals."
" That is: Improving, continuously improving our investment climate, including continue to liberalize our trading relationships with a number of countries and the global trading regime, keeping taxes low back here and allowing our businesses to grow, compete and create jobs," he added.
Speaking at the National Press Club in Washington, Paulson was asked if he would like to see the dollar strengthen but merely repeated the mantra used over the years by US officials.
" I believe very much so, that a strong dollar is in our national interest," said the Treasury chief.
Story by Veronica Smith from AFP
AFP 13 2053 GMT 03 08Copyright© 2008 respective author or news agency. All rights reserved.
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