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Last Updated: Wednesday, 17 November, 2004, 22:57 GMT
Dollar hits new low against euro
Exchange bureau
The dollar has hit another record low
US Treasury Secretary John Snow has reiterated the US commitment to a strong dollar, as the greenback hit another record low against the euro.

He told the Royal Institute of International Affairs in London that US policy "is for a strong dollar".

European policymakers have called the dollar's slide "brutal", blaming the euro's strength for dampening growth.

But Mr Snow's comments made little impact on the markets, with the euro reaching as high as $1.3047 in London.

In late trading in New York on Wednesday, the euro eased to $1.3032.

Meanwhile, an organisation representing more than 95 industry and agricultural groups accounting for about 90% of US exports, have dismissed European complaints.

"Pundits have forgotten that the dollar's descent began only after it had soared to abnormal and dangerous heights," said Frank Vargo, from the National Association for Manufacturers in a statement.

"After years of stability, the dollar shot up 25% against other currencies, peaking in 2002," he said.

'Shared responsibility'

In his speech earlier, Mr Snow said the world "functions best with free trade and free capital flows."

"Nobody has ever devalued their way to prosperity," he added.

Dollar bill
A cheap dollar is good for US exports
He pledged to curb the US massive budget deficit - but said the size of the current account deficit at the moment was evidence of "economic strength".

"Our dollar policy remains unchanged because a strong dollar is in both the national and international interest," he added.

But while admitting that the deficits were hampering growth elsewhere in the world, he said that a "shared responsibility" among nations is needed to solve the problem.

He praised China, saying it had moved towards market discipline for its currency.

He said China's decision to raise two key interest rates last month for the first time in nine years "represents significant steps consistent with China's move to a flexible and market-based exchange rate".

Analysts point out despite the positive comments on the dollar, President George W Bush's administration had done little to stop the currency's slide.

Some analysts maintain the US is secretly happy with a lower dollar which helps makes its exports cheaper in Europe, thus boosting its economy.

They also say the dollar is unlikely to strengthen significantly, until the US economy improves.

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