MercoPress. South Atlantic News Agency

Geithner vows not to devalue the dollar for export advantage

US Treasury Secretary Timothy Geithner in the eye of the storm

Treasury Secretary Timothy Geithner vowed 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 US currency valuations are expected to take centre 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

Answering questions on China, Geithner said he believes Beijing will continue to lift the value of the Yuan to aid the rebalancing of its economy away from exports and toward domestic growth.

Asked how much higher China should allow the Yuan to rise Geithner said: ”Higher.“
”You can't know how far it should go. What you know now is that it's significantly undervalued which I think they acknowledge and it's better for them, and of course very important for us, that it move. And I think it's going to continue to move,“ Geithner said.

Beijing has allowed its currency to rise about 2.8% since ending a 23-month peg to the dollar in June, with most of that rise coming since August.

Asked if the dollar would lose its status as the world's reserve currency, the Treasury chief said, ”not in our lifetime.”

To do this, Geithner said the United States must maintain growth, but also demonstrate that it can restore budget discipline and improve its long-run fiscal prospects.

However a top U.S. Federal Reserve official was quoted in the international press arguing that another round of asset purchases must be large enough to spur recovery, “and 100 billion USD a month may be enough to achieve the necessary impact”.