U.S. dollar gains some ground but concerns mount
www.chinaview.cn 2008-06-10 17:29:16   Print

    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 say.

    GOVERNMENT SUPPORT

    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 currency strong.

    "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 September.

    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 rates.

    MOUNTING CONCERNS

    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 say.

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 File Photo)
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    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. 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."  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

Editor: Jiang Yuxia
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