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Last Updated: Monday, 22 November, 2004, 02:19 GMT
Bush stands up for strong dollar
By Marek Bekerman
BBC News

US President George W Bush at the Apec summit in Santiago, Chile
Bush pledged to halve the US budget deficit
President George W Bush has again said he is committed to a strong US dollar.

Mr Bush said the best way to reassure those concerned about the dollar's decline was to deal with his country's large budget deficit.

The US president was speaking in Chile at the end of the 21-nation Apec conference, which he attended.

The United States also has a large foreign trade deficit, while the dollar has lost 30% of its value against the euro in the past four years.

There is growing scepticism whether America's commitment to the strong dollar is genuine.

Its $592bn trade deficit is large by any standards - more than 5% of the total value of the US economy over the last year. And so is the budget deficit at $413bn.

President Bush had already said that he planned to halve it, and repeated this commitment in Chile.

Deficit 'too large'

Yet it is clear that the federal government will continue to borrow. Only last week, the president signed a new law, allowing the government to increase its borrowing by a further $800bn.

The best way to affect those who watch the dollar's value is to make a commitment to deal with our short-term and long-term deficits
George W Bush

US Treasury Secretary John Snow agreed during a recent visit to Europe that the US deficit was too large, but at the same time he said America would pay whatever it takes to win the war on terror.

This is obviously a top priority for the Bush administration - and a growing concern for Europe and Asia, whose currencies have strengthened significantly against the US dollar.

Many European businesses are becoming uncompetitive against American ones, with the euro stronger than ever. But Mr Snow virtually ruled out any significant US intervention on the currency markets.

Even more worryingly, US Federal Reserve chief Alan Greenspan - the guru of global macro-economics - recently suggested that the dollar might fall even further.

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