WASHINGTON, Nov. 10 (UPI) -- The Bush administration says it favors a strong dollar, but has done little to stop its slide to new lows against the euro and yen.
Indeed since the re-election of President Bush the dollar has weakened further and is down 1.4 percent against the euro just since Nov. 2, the Wall street Journal reported Wedensday.
Treasury spokesman Rob Nichols said this week the administration supports a strong dollar, but last month his boss joined the six other major industrial country treasury heads in saying "exchange rates should reflect economic fundamentals," though they opposed undue "volatility."
The effect of the weaker dollar is to make U.S. goods cheaper abroad and imported goods more expensive for U.S. consumers, which could help the growing trade deficit. But it also could hurt the European economies and that of Japan, major exporters to the United States.
That has caused the administration to focus more on China's yuan than the U.S. dollar. China is a major trader and a huge consumer of imported oil. The yuan is hitched to the dollar. Washington has been putting heavy pressure on Beijing to break the connection and to allow the yuan to float. They would expect the yuan to rise, which would relieve the euro and Japan's yen of pressure from the dollar decline.
