strong dollar/weak dollar??????

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    WASHINGTON, Oct. 14 (Reuters) -- President George W.
    Bush said on Tuesday that he would use his trip to Asia
    to press China and Japan to stop trying to weaken their
    currencies, which American manufacturers say are hurting
    their exports.


    Bush, in an interview with Asian journalists, made clear his
    preference for less intervention by Japanese authorities to
    weaken the yen against the dollar, saying: "Markets ought
    to be determining respective currencies."


    But, at the same time, he restated the U.S. policy of
    wanting a strong dollar -- a policy many investors see as
    hollow given the administration's tolerance of the dollar's
    slide, most recently to three-year lows against the yen.


    "I'll remind them (Chinese and Japanese leaders) that
    this nation has a strong dollar policy, and we expect the
    markets to reflect the true value of currency," Bush said.


    White House national security adviser Condoleezza Rice
    rebuffed suggestions that the president was sending
    conflicting messages by stating his support for a strong
    dollar policy while prodding Japan and China to implement
    policies that would effectively reduce the value of the U.S.
    currency.


    "The president believes that the market ought to set these
    rates, and the president is adhering to a strong dollar
    policy which has been U.S. policy for a very long time,"
    Rice said.


    The administration has come under mounting pressure to
    take action against China.


    U.S. manufacturers -- a critical base of support for Bush
    in the run-up to next year's presidential election -- and
    members of Congress have accused Beijing of flouting
    U.S. and international trade laws with its pegged currency.


    Senate Minority Leader Tom Daschle, a South Dakota
    Democrat, urged the administration to start an investigation
    of China's actions under the World Trade Organization
    (WTO).


    "We are losing hundreds of thousands, in fact, now
    millions of manufacturing jobs, many of them going to
    China, as a direct result of this currency manipulation,"
    Daschle said.


    Rice said Bush would urge the Chinese to "adhere
    completely to their WTO obligations, and to be certain
    that ... they are really, practically following the letter and
    the spirit of what they've signed on to."


    A small group of lawmakers said they would propose
    legislation to repeal China's trade privileges in the
    United States.


    Some of Bush's economic advisers have been wary of
    pushing Beijing too hard, warning that a sudden
    revaluation of the yuan currency could trigger a banking
    crisis.


    Federal Reserve Governor Ben Bernanke said it would be
    dangerous for China to move to a floating yuan, and
    warned the currency could actually weaken if that were
    to take place.


    Bush departs on Thursday for Japan to meet Prime
    Minister Junichiro Koizumi, then travels to Bangkok for
    the Oct. 20-21 annual summit of the Asia Pacific
    Economic Cooperation (APEC) forum, where he will
    meet with Chinese President Hu Jintao.


    China has rebuffed calls from U.S. Treasury Secretary
    John Snow to allow the yuan to trade more freely, and
    other Bush administration officials played down prospects
    for a breakthrough when Bush meets with Hu.


    Congressional aides said Bush was wary of antagonizing
    China while it is serving as the key broker in nuclear talks
    with North Korea.


    The Treasury plans to delay until Oct. 30 a report to
    Congress on whether major trading partners have unfairly
    manipulated their currencies to gain a trade advantage.
    Lobbyists said they expected China to be singled out.


    "Countries need to be mindful that we expect there to be
    fair trade," Bush said, citing the U.S. trade imbalance.
    The United States' trade deficit with China hit a monthly
    record of $11.7 billion in August.


    Manufacturers believe Beijing's currency policy makes it
    tough for them to compete with Chinese rivals, who can
    offer their goods in the United States at lower prices. U.S.
    manufacturers have shed about 2.7 million jobs over three
    years and largely blame China for their competitive woes.


    "The president believes that if the playing field is level and
    if we are engaged in free and fair trade, Americans can
    compete anywhere," Rice said.


    By seizing on the currency issue, Bush hopes to score
    political points in rust-belt states like Michigan, Ohio,
    and Pennsylvania.


    "We'll talk about currency with the Chinese and with my
    friend Prime Minister Koizumi," Bush said.


    "The way that currencies ought to be valued is based
    upon economic activity, a fiscal policy, monetary policy
    of their respective governments, the potential for growth,
    the potential for long-term viability of the economies. That's
    how our respective currencies ought to be valued," he added.

 
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