WASHINGTON - President Bush's forceful call yesterday for a stronger U.S. dollar may be coming a little late for Americans fed up with gasoline prices topping $4 a gallon and steadily rising costs of other imported goods.
As he left for Europe, the president said the United States was committed to keeping its currency strong. The dollar has suffered a long slide against the euro and other international currencies.
Bush's words signaled his administration's concerns about the economy. The sinking greenback is one reason that fuel prices are at record levels, and the run-up in energy prices is battering consumers and worsening the risk of recession.
"A strong dollar is in our nation's interests. It is in the interests of the global economy," Bush said outside the White House.
Bush and Treasury Secretary Henry M. Paulson Jr. appear to be easing away from their hands-off approach to managing the value of the dollar. While a strong dollar has long been stated U.S. policy, that usually has amounted to no more than rhetoric unbacked by specific steps.
The government has limited options for propping up the greenback, especially in an election year with rising unemployment, slumping consumer confidence, and the worst housing market in decades.
Paulson declined to rule out direct intervention - in which the government would buy dollars in currency markets - as a way to influence the currency's value. Another way to shore up the dollar is for the Federal Reserve to raise interest rates - seen as unlikely, given the current state of the economy.
For seven years, the administration has refused to intervene in currency markets, even though the dollar has been sliding in value for most of the time Bush has been in office. The administration has insisted that currency levels should be set by free-market forces.
A weakening dollar has some economic advantages. It reduces the cost of U.S. goods sold overseas, for instance, helping U.S. manufacturers who depend on foreign markets. But it also has been a major factor in the rising gasoline prices.
European allies have urged the Bush administration to speak up more strongly in defense of the dollar. The president's unusual comments yesterday seemed to be an attempt to ease their concerns.
Since oil worldwide is priced in dollars, Europeans blame some of their own inflation on the weakening dollar.
Global oil producers are demanding higher prices for crude oil, which is priced in dollars, as the greenback has fallen to record lows this year against the euro and other currencies.
The comments by Bush and Paulson yesterday followed remarks by Federal Reserve Chairman Ben S. Bernanke last week that the dollar's steep decline had led to worrisome inflation. He stressed that the Fed was paying close attention to the situation.
The last time the United States intervened in currency markets was the fall of 2000 in the final year of the Clinton administration when the U.S. government sold dollars in an effort to support the weak euro.