U.S. Treasury Secretary Reiterates Belief In Strong Dollar

By Agence France-Presse U.S. Treasury Secretary John Snow on Jan. 7 reaffirmed his belief in the so-called strong-dollar policy as the American currency hit fresh lows against the euro. "We believe in a strong dollar; a strong dollar is in the U.S. interest," Snow told reporters following a speech to the U.S. Chamber of Commerce in Washington, D.C. The dollar has gone into free fall against the European currency since mid-November, hitting almost daily lows against the euro in the past week, as investors fret over widening U.S. budget, trade and current account deficits. Despite the treasury's strong dollar stance in the face of the currency's weakening value, Snow also reaffirmed Washington has no intervention plans. "But, of course, the exchange value of currencies should be set in open, competitive markets," the treasury secretary stressed. Worries about U.S. deficits have sapped the dollar's strength, but analysts say that aside from official intervention it will take a reversal in the budget deficit and other fundamental factors to provide lasting support for the dollar. Last year, the euro rose 22% against the dollar, while the British pound gained 11% and the U.S. unit fell 10% against the yen. Snow conceded the budget deficit was a concern, but he said it is "entirely manageable" and that the economy is now on a path to a sustainable recovery. The government's deficit exploded to an unprecedented $374 billion in 2003. The Bush administration allowed the record deficit to pay for the huge tax cuts that it says are now restoring economic vitality. U.S. indicators such as falling jobless claims and growing business confidence "suggest a sustainable economic recovery," Snow told listening entrepreneurs. Copyright Agence France-Presse, 2004