BEIJING, June 10 (Xinhua) -- The U.S. dollar gained some ground against the
euro and other currencies as the U.S. government voiced its support for a strong
currency, but concerns are mounting about the greenback further slide, analysts
Before leaving for the week-long visit to Europe, U.S. President George W.
Bush made a clear point that the United States is committed to keeping its
"A strong dollar is in our nation's interests. It is in the interests of
the global economy," Bush said outside the White House on Monday.
Also on Monday, U.S. Treasury Secretary Henry Paulson said he would not
rule out currency intervention as a policy tool to stabilize the U.S. dollar.
"I would never take intervention off the table or any policy tool off the
table," said Paulson in an interview on CNBC business television channel. "I
just can't speculate about what we will or won't do."
The dollar rebounded somewhat Monday afternoon against the euro and yen on
Bush and Paulson's comments.
Meanwhile, the dollar was also boosted by Federal Reserve Chairman Ben
Bernanke's warning of worrisome inflation caused by the dollar's deep decline,
saying the Fed was paying close attention to the situation.
Earlier this month, Bernanke signaled that the central bank's rate-cutting
campaign which started last September was probably over, which increased
speculation of possible interest rate hikes.
To prevent the economy from sliding into a recession, the Fed has cut a key
interest rate by a total of 3.25 percentage points from 5.25 percent since last
The Bush administration's moves were seen as unusual by analysts, as it
always adopted hands-off approach to managing the value of the dollar and
insisted currency levels should be set by free market forces.
For most of the past seven years, the dollar has been sliding in value and
the weakening pace has quickened since last August, as the U.S. economy is
slowing down significantly and the Federal Reserve keeps lowering interest
The depreciation of dollar has some economic advantages for the United
States. For example, it reduces the cost of American goods sold abroad and
boosts U.S. exports.
But a weakening dollar is also blamed for increased inflation pressure
worldwide and global oil price hike.
OPEC Secretary-General Abdullah al-Badri said on May 23 that speculation
and the weak U.S. dollar, rather than insufficient output, should be held
responsible for soaring oil price.
"Even if we increase output tomorrow, the prices will not come down because
of speculation and because of a weak dollar," he said.
Meanwhile, the continued depreciation of the dollar aroused serious
concerns of developing countries.
Chinese ambassador to the World Trade Organization (WTO) Sun Zhenyu on
Monday urged the United States to steady the currency as international concern
mounts about its weakness.
The depreciation seriously affects the exports of other countries,
especially those vulnerable and export-oriented developing countries,
undermining their ability to further develop and to address their social
problems, he said.
"In this connection, China hopes that the United States, as a driving
engine of the world's economy, could take quick and targeted actions to
stabilize the U.S. dollar," he said.
Despite recent rebound of the greenback, there is not a rosy picture for
shoring up of the currency.
The Bush administration has limited options for propping up the dollar amid
rising unemployment, slumping consumer confidence and the worst housing market
in decades, observers say.
To counter projected inflation pressures, European Central Bank chief
Jean-Claude Trichet on Monday reiterated a warning made last week that euro zone
interest rates could be raised next month.
The interest rate differential will further depress the dollar, analysts
Paulson not rule out intervention to
help prop up U.S. dollar
U.S. Treasury Secretary Henry Paulson
speaks during a news conference in Jeddah May 31, 2008. (Xinhua/Reuters
WASHINGTON, June 9 (Xinhua) -- U.S. Treasury Secretary Henry Paulson said Monday
that he would not rule out the possibility of intervening to stabilize the U.S.
"I would never take intervention off the table or any
policy tool off the table," said Paulson in an interview on CNBC business
television channel. "I just can't speculate about what we will or won't
do." Full story
Paulson: U.S. dollar remains the world's reserve currency
ABU DHABI, June 2 (Xinhua) -- U.S. Treasury Secretary Henry Paulson ensured in United Arab Emirates(UAE) on Monday that the U.S. dollar remains the world's reserve currency and its recent decline is only a small factor behind oil-price hike.
"The U.S. dollar has been the wold's reserve currency since the World War Two and there is a good reason for that," Paulson told a UAE business group, adding that the United States has "the largest, most open economy in the world", and the U.S. capital markets are "deepest and most liquid." Full story