(ShanghaiDaily, Sept 19, 2006)US Treasury Secretary Henry Paulson said yesterday a strong US dollar was in the interest of the United States and he was not seeking any "quick fixes" on China's currency situation.

Paulson, just before he wass due to head to China for his first official visit, was briefing reporters after meetings of the International Monetary Fund and World Bank.

"A strong dollar is clearly in our nation's interest," Paulson said. "I believe that when foreign governments or foreign investors ... choose to buy US securities they've got confidence and they know they're getting the best risk-adjusted rate of return."

Paulson's remarks about China gave the US dollar a fresh boost as the market interpreted this as a sign that the United States would not step up pressure on the Chinese government to allow its currency to strengthen faster. The US dollar edged up to a five-month high of 118.23 yen.

The former Goldman Sachs chairman, who met fellow finance chiefs from the Group of Seven industrial countries on Saturday for the first time as US Treasury chief, is headed for China today. Paulson is scheduled to arrive in Beijing on tomorrow morning and will be there until Friday.

Paulson took over Treasury in July following the resignation of former Treasury Secretary John Snow, becoming the Bush administration's third Treasury chief.

Peg broken

China freed its currency from a peg to the US dollar in July 2005 and revalued it by 2.1 percent, but since that time it has appreciated about another 2 percent.

Paulson said that all the G-7 participants meeting in Singapore on Saturday agreed that currency flexibility was important.

"I said to my colleagues, sitting around the table at the G-7, that I wasn't minimizing any of the other risks that we were talking about, I wasn't minimizing the imbalances, but I felt the biggest risk for all of us was protectionist sentiment in one form or another."
source:ShanghaiDaily
China