Top White House economic adviser Mr Lawrence Lindsey said yesterday that US officials favour a strong dollar but reiterated that the value of the currency should be set by the market.
His comments came on the same day that US Treasury Secretary Paul O'Neill, who has been criticised for traveling abroad as stocks sank to multiyear lows, defended his actions yesterday and said the economic recovery remained on track.
The dollar has shed more than 10 per cent of its value against the euro and the yen this year, dragged down by a weak stock market and corporate scandals, but the currency staged a rebound last week.
Mr O'Neill appeared on several US talk shows as chief spokesman for an economy he said was fundamentally strong.
"My conviction is this, the U.S. economy is without any doubt the strongest economy in the world," Mr O'Neill said. Investor concerns about the integrity of corporate America, after a series of accounting and profit scandals, made for another roller-coaster week in the stock market.
Mr O'Neill, who famously predicted after the September 11th attacks the market would reach new highs, said he did not regret the comment and that the market is still a good long-term buy. He declined to predict a market bottom.
Asked whether he was considering resigning, Mr O'Neill said, "I'm going to keep working on the fundamentals. I think that's what I'm supposed to do and the spectators can say whatever they will."
Mr Lindsey told ABC Television's This Week show: "We're all for a strong dollar."
Bush administration officials have repeatedly said they favor a strong dollar, but the currency's recent weakness combined with past conflicting comments from members of the economic team have led some analysts to question whether the United States really has a policy on the dollar.
"The value of the dollar's going to be set by the markets," Mr Lindsey said.
The dollar ended last week at two and a half week highs around 119 yen and near two week peaks against the euro below 99 cents.
The dollar also surged last week against the Swiss franc and Canadian and Australian dollars. - (Reuters)
