Geithner: Strong Dollar 'Very Important' for U.S.

Nov. 11, 2009
The dollar has plunged about 15% against a basket of six other major currencies from a peak earlier this year.

U.S. Treasury Secretary Timothy Geithner said Wednesday a strong dollar was "very important" to the United States, seeking to reassure Asian nations concerned about the greenback's recent slump.

"I believe deeply that it's very important for the U.S. and the economic health of the U.S. that we maintain a strong dollar," Geithner told reporters in Tokyo.

Given the dollar's key role in the world financial system, "we bear special responsibility for trying to make sure that we are implementing policy in the U.S. that will sustain confidence" among global investors, he said.

The dollar has plunged about 15% against a basket of six other major currencies from a peak earlier this year, sparking concern among Asian countries that have big holdings of dollars in their foreign exchange reserves.

The dollar's weakness is also bad news for many Asian exporters, which are struggling to maintain their competitiveness, particularly against Chinese rivals benefiting from the relative stability of the yuan.

Geithner also said he believed China recognized it would be beneficial for its economy to allow greater flexibility in the yuan exchange rate.

He said China was playing a key role in driving the global economy and economic reforms in Asia's second largest economy would take some time.

"China has laid out this very broad direction of reforms" to boost domestic demand, Geithner said. "It's a very complicated mix of policy changes. As part of that, they've recognized that it's in their interest over time to move to a more flexible . . . exchange rate."

For years, the United States has urged Beijing to deepen the reform of its exchange rate regime, hinting that China kept the value of the yuan, or renminbi, artificially low to boost exports.

Beijing re-pegged the yuan to the U.S. dollar in July 2008 as the global financial crisis hit its exports.

Geithner stopped off in Japan on his way to a meeting of finance chiefs from member nations of the Asia-Pacific Economic Cooperation (APEC) forum Thursday in Singapore. It was his first visit since taking office in January.

He praised efforts by Prime Minister Yukio Hatoyama's nearly two-month-old government to spur domestic demand and reduce Japan's reliance on exports.

Dow Jones Newswires contributed to this story.

Copyright Agence France-Presse, 2009

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