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It''s not an energy crisis but a money crisis
US Treasury's Snow Says He Backs Strong Dollar
By Glenn Somerville
Reuters
Friday, May 19, 2006
http://today.reuters.com/investing/financeArticle.aspx?
type=bondsNews&storyID=2006-05-
19T135738Z_01_N19283785_RTRIDST_0_ECONOMY-SNOW-DOLLAR-UPDATE-1.XML
NEW YORK -- U.S. Treasury Secretary John Snow insisted on Friday
there has been no weakening in the United States' commitment to a
strong dollar and vowed to hold China's "feet to the fire" over
promises to make its currency more flexible.
On CNBC Television, Snow was asked whether the Bush administration
has become less forceful in advocating a strong dollar and so
effectively has endorsed a decline in its value.
"I don't think so. It's the policy. It's in our interests," Snow
said. "But we also say as well that currency values should be set in
open, competitive currency markets, to be in line with underlying
supply and demand and market forces," he added.
Following the Group of Seven finance ministers' meeting in
Washington on April 21, many analysts felt the ministers were
willing to see the dollar's value decline as part of an effort to
reduce global imbalances, including the U.S. trade deficit.
Snow insisted that Washington still backed a strong dollar.
"It's a policy we've made clear, that Japan signed on to, the
statement coming out of the G7 (finance) ministers' meetings, which
said open, competitive markets are the best way to set currency
values," Snow said, adding: "I say our policy is the strong dollar."
He also said that neither the United States nor other key trade
partners should follow "beggar-thy-neighbor" currency policies that
seek to gain an advantage by pricing exports unfairly cheaply.
Snow was asked why the Treasury Department declined to name China a
currency manipulator in a report to Congress last week, given the
huge deficits the United States is incurring on its trade with China
and congressional anger over the issue.
Snow said the United States was disappointed that China was not
letting market forces play a larger role in setting the value of its
currency, the yuan, but said threats wouldn't help persuade it to
move more quickly.
"We've got to hold their feet to the fire," he said, to make sure
that China follows through on pledges to introduce increased
currency flexibility.
"We are very unhappy that the Chinese aren't moving faster. They
need to move," Snow said. "It's in their interests. It's in the
interest of the global economy."
But he added: "They respond better in the absence of threats than in
the presence of threats," Snow said. "The movement in the currency
is more likely given what we did than if we'd done the other."
Snow, who was in New York to address the Bond Market Association
before heading for Egypt to meet regional finance ministers, turned
aside questions about reports that he might leave his Treasury post
in coming months.
"I can't comment on rumors and speculation," he said, adding that he
didn't think stories about his possible departure affected his
ability to do his job.
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