Your preznit is busy trying to convince the world that he’s really serious about supporting the dollar and reducing the budget deficit.
President Bush (news – web sites) said Wednesday that the White House will shore up the sliding dollar by working to cut record budget and trade deficits and overhaul Social Security (news – web sites). But his words fell flat on currency markets as a new Treasury report showed the United States is having trouble financing its current huge debt.
The policy of my government is a strong dollar policy,” Bush said during a meeting with Italian Prime Minister Silvio Berlusconi, who is worried that the fall of the dollar against the euro has made European exports more expensive. The dollar has weakened about 13% against the euro since spring.
The president’s comments did little to reassure currency traders, who pushed the dollar lower against the yen and euro, the currency of 12 European nations. The euro rose to $1.3412 Wednesday, from $1.3307 Tuesday. The dollar was weaker against the Japanese yen, at 104.23 yen, down from 105.40 late Tuesday.
Traders were worried about a report Wednesday from the Treasury Department (news – web sites) tracking foreign purchases of such U.S. assets as stocks and bonds, and U.S. investment abroad. The report showed a slowdown in net capital inflows, casting doubt on the nation’s ability to finance its trade deficit. That could erode confidence in the dollar.
“Deep in debt to the rest of the world, we think the last thing America needs now is for its own investors to bail out,” says Joseph Quinlan, chief investment strategist at Banc of America Capital Management. “Talk about bad timing.”