Paulson says strong dollar in US interest
WASHINGTON (Thomson Financial) - US Treasury Secretary Henry Paulson told G7 finance ministers today that a strong dollar is still in the US economic interest, but declined to say whether other G7 finance ministers pressed the US on the rapid decline of the dollar and how it is affecting their exports.
'I was very clear and it didn't surprise anyone... that I believe a strong dollar is in our nation's interest, and believe that the currency value should be determined based upon underlying economic fundamentals in a competitive marketplace,' Paulson told reporters after today's G7 meeting.
When asked whether or how other G7 ministers raised the issue of the declining dollar, he said only that he would let others talk about what they raised in the meetings.
Also on currency, he reiterated that G7 members want China to allow the yuan to appreciate more quickly, and said he believes China agrees with other countries on currency matters, but the question of pace is still in dispute.
Paulson said G7 members also discussed the rising influence of sovereign wealth funds, and said there would be a dinner tonight with China, Saudi Arabia and other countries that are using these funds more frequently as government reserve balances grow.
Paulson said one concern raised by G7 members is that sovereign wealth funds make investment decisions abroad for commercial motives, rather than other motives. He also said he has 'some sense' that countries want more investment reciprocity before agreeing to open their markets wide to large sovereign wealth funds looking to take a stake in companies.
'There's agreement that if we can work to a number of best practices, this would be good,' he said of the G7 meeting.
Paulson also said today that G7 members briefly discussed rising oil prices, but said there was a recognition that in the short term, the global economy has weathered high prices more than might have been expected.
In other areas, Paulson said G7 members discussed how to learn from the mistakes that caused problems in the subprime mortgage market, and agreed that they should work together to ensure financing tools are not used to promote the development of Iran's nuclear program. He said the US challenged G7 members to think of creative ways to achieve this goal, preferably through multilateral efforts
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