PALO ALTO, California/WASHINGTON: US Treasury Secretary Timothy Geithner vowed on Monday that the United States would not devalue the dollar for export advantage, saying no country could weaken its currency to gain economic health.
“It is not going to happen in this country.” Geithner told Silicon Valley business leaders of devaluing the dollar.
Geithner broke his silence on the dollar’s protracted slide ahead of this weekend’s meeting of finance leaders from the Group of 20 wealthy and emerging nations in South Korea, where rising tensions over Chinese and the US currency valuations are expected to take center stage.
“It is very important for people to understand that the United States of America and no country around the world can devalue its way to prosperity, to (be) competitive,” Geithner added. “It is not a viable, feasible strategy and we will not engage in it.”
Answering audience questions before the Commonwealth Club of California in Palo Alto, he said the United States needed to “work hard to preserve confidence in the strong dollar.”
Geithner, normally reluctant to publicly discuss currency and market movements, has not uttered the so-called “strong dollar mantra” — a refrain he helped create at Treasury in the 1990s — since February.
On Friday, the dollar index hit a 10-month low against a basket of major currencies, while the greenback has been plumbing fresh 15-year lows against Japan’s yen.
Many emerging market countries are complaining that Fed money creation is weakening the dollar, and causing more funds to flow into their markets, pushing up their currencies.
Talk of a “currency war” has persisted as countries take action to keep from losing export competitiveness.
Brazil on Monday moved to cool a strong rally in its currency by raising taxes for foreigners buying local bonds and trading in foreign exchange derivatives.
Finance Minister Guido Mantega said the move was aimed at reducing foreign investment into Brazil, and he urged other countries to take coordinated action against the weak dollar.
Argentina’s Minister of Economy and Public Finance Amado Boudou on Monday called on developed nations to focus on creating jobs rather than actions that weaken their currencies, saying a “true currency war” was underway.