US' Paulson says stands by intervention comment

WASHINGTON - U.S. Treasury Secretary Henry Paulson on Tuesday said he stood by comments made a day earlier in which he said he would never rule out currency intervention as a potential policy tool.

By (Reuters)

Published: Tue 10 Jun 2008, 9:56 PM

Last updated: Sun 5 Apr 2015, 1:08 PM

"I'll let my comments stand," Paulson said in an interview with Bloomberg Television. "I never like to say never, but my focus is on long-term fundamentals."

He repeated that the long-term fundamentals of the U.S. economy were strong, compared favorably to other major industrial economies and would show through to the dollar's value. "I believe that those long-term fundamentals will be reflected in our currency value."

Paulson said that was the same message that he would deliver to other finance ministers from the Group of Eight nations meeting in Osaka this coming weekend, although he declined to comment directly on whether the dollar's weakness and potential intervention would be a subject of discussion.

"I don't think you should expect to see us break a lot of new ground here, because the messages are absolutely correct and I'm going to continue speaking the way I have been speaking," he said.

Asked whether Chinese officials may raise the topic of the dollar's weakness at a meeting with U.S. officials next week in Washington, Paulson said: "I get a lot of questions but we again compliment them on the progress they've ... made in moving their currency."

"It has appreciated almost 20 percent now and the pace of appreciation has accelerated but it still doesn't represent fundamental economics, so they've got farther to go," he said.

Paulson said a stronger yuan was in China's interest. "Right now, when they're fighting inflation, having a currency that reflects market values will be a valuable tool and I think they're beginning to see that."

The Treasury chief said the U.S. economy had performed "better than many people had feared" but that the run-up in oil prices to fresh highs has presented a challenge.

"When I look at these rising energy prices, they are a strong headwind, they are a real burden on Americans and a burden on our economy and they risk prolonging or lengthening this economic slowdown," he said.

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