Geithner backs strong-dollar strategy

Bloomberg News / April 27, 2011

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WASHINGTON — Treasury Secretary Timothy F. Geithner yesterday reaffirmed the US commitment to a strong dollar and said the country won’t weaken the currency to gain an edge over its trading partners.

“Our policy has been and will always be, as long as at least I’m in this job, that a strong dollar is in our interest as a country,’’ Geithner said in remarks at the Council on Foreign Relations in New York. “We will never embrace a strategy of trying to weaken our currency to try to gain economic advantage.’’

Geithner’s comments, in response to a question about the dollar’s recent decline, show his efforts to reassure investors that the United States will restore long-term economic growth and stability.

The dollar dropped for a sixth day against the euro, matching the longest losing streak since May 2009, on speculation the Federal Reserve will consider measures to keep yields low to support the US economy. The greenback also fell to almost the lowest level since August 2008 against the currencies of major US trading partners.

Geithner’s comments reflected an unchanged US policy stance toward the dollar, said Edwin Truman, a former Federal Reserve and Treasury official who is a senior fellow at the Peterson Institute for International Economics.

“There are people around who think that the only way the US economy can recover is by having a very weak dollar and relying exclusively on exports,’’ Truman said.

Geithner was saying “the United States is not trying to devalue its way to prosperity,’’ Truman said. “That’s not in the interest of the United States or the world, and wouldn’t work anyhow.’’

Geithner said the United States needs a “credible strategy’’ to reduce its budget deficits over time, without moving too quickly and choking off economic recovery.

President Obama has offered the outlines of a plan to reduce the debt by $4 trillion.

Geithner also said oil prices have become an obstacle to economic growth.