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Dollar Makes Gains As Bush, Economic Officials Talk It Up

The Associated Press

Published: June 10, 2008

NEW YORK - After last week's plunge, the dollar climbed against the euro in late New York trading as several government officials and President Bush voiced their support for a strong U.S. currency.

The 15-nation euro slid to $1.5652 in late New York trading from $1.5768 late Friday.

On Monday, Treasury Secretary Henry Paulson told CNBC television that he wouldn't rule out currency intervention as a policy tool in order to steady the dollar.

"I would never take intervention off the table or any policy tool off the table," he said.

Meanwhile, New York Federal Reserve President Tim Geithner said in a speech in New York that the central bank must pay attention to the dollar, and that tighter monetary policy may be necessary.

Higher rates, or a tightening policy, can fight inflation and support a currency, while lower interest rates can force down a currency as investors seek higher-yielding assets.

Also on Monday, Bush said "a strong dollar is in our nation's interests. It is in the interests of the global economy ... the long-term health and strong foundation of our economy will shine through and be reflected in currency values."

Bush's statement is somewhat unusual, as he does not regularly comment on currency matters.

Last week, Fed Chairman Ben Bernanke also voiced support for a strong currency.

The British pound rose to $1.9751 from $1.9713 late Friday, as the dollar bought 106.10 Japanese yen, up from 105.10.

Also propping up the dollar were unexpectedly positive housing data. The National Association of Realtors' index of pending home sales rose to 88.2 in April, its highest reading since October. The results beat economists' expectations.

The dollar started sliding Thursday after European Central Bank President Jean-Claude Trichet said the bank could increase interest rates in July to counter inflation. Friday's triple-whammy of unemployment data, surging crude futures and a Wall Street plunge furthered the decline.

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