DUBLIN (AFP) - US Treasury Secretary John Snow said that financial markets should determine the value of the dollar, while reaffirming his long-stated policy to support a "strong dollar".
"Currency values are best set in open and competitive exchange markets," he told reporters in Dublin on the first leg of a tour of Europe, as the dollar approached new record lows against the euro.
However, Snow also reaffirmed his long-stated backing for a "strong dollar".
"We support a strong dollar. A strong dollar is in America's interest. Markets are driven by fundamentals... Fundamentals are best determined by the operation of open and competitive markets," he said Monday.
The US Treasury chief declined to comment on recent exchange rates, or on speculation about possible central bank intervention on foreign exchange markets to slow the US currency's decline.
Snow began a European tour Sunday aiming to highlight the need for stronger economic growth in Europe and elsewhere as Washington tries to blunt criticism over massive US deficits that have pushed the dollar to new lows.
The single European currency rose to as high as 1.2999 dollars in early European trading, within a whisker of a record high of 1.3005 dollars seen on Wednesday of last week.
The euro later eased back to 1.2964 dollars as the market digested Snow's comments, against 1.2973 dollars late on Friday in New York.
The dollar fell to 105.48 yen from 105.54 on Friday.
The euro pierced the symbolic 1.30-dollar level last week for the first time since it began trading on foreign exchange markets in January 1999.
Dealers are worried about how the United States will attract the necessary capital inflows to fund the deteriorating trade balance and budget deficit. The fear is that overseas investors might lose confidence in the debt-ridden US economy, placing their money elsewhere.
11/15/2004 - 10:40 GMT - AFP