--O'Neill says Fed has "done well" with its rate cuts
--O'Neill sees US fiscal and monetary policy "aligned"
By Edward Kean
Washington, Jun 25 (BridgeNews) - Responding to criticism from business groups that the U.S. dollar is overvalued, U.S. Treasury Secretary Paul O'Neill said Monday that "great companies" can take steps to overcome the effects of the strong U.S. currency.
"I would suggest the great ones don't worry about a weaker or stronger dollar," O'Neill said in an interview on Fox News. "Great companies can do two things," O'Neill said. "They perform in such a way that what the relationship is between the U.S. dollar and other currencies doesn't matter. They make it irrelevant and for those who can't figure to be so good that it (the dollar's value) can be irrelevant, they hedge it." More O'Neill's comments essentially are a re-affirmation of previous statements he has made in response to complaints from U.S. manufacturers about the strong dollar.
In recent weeks, some corporate groups have become more outspoken in expressing concern about the damage to their businesses from the dollar. A rising currency tends to U.S. exports more expensive while making imports less expensive.
The National Association of Manufacturers and other industry groups sent a letter earlier this month to O'Neill in which they urged Treasury to clarify its policy toward the dollar to ensure the Treasury is "not seen as endorsing an ever stronger dollar irrespective of the economic fundamentals."
Also, the new chairman of the Business Roundtable, another influential business group, has complained publicly about the strong dollar and has said he will press the issue with other Business Roundtable members. But O'Neill and the Treasury has said repeatedly the U.S. will not back away from its rhetorical support for a strong dollar. Separately, O'Neill said today that the Federal Reserve has "done well" with its moves to cut interest rates this year and said that fiscal and monetary policies now are "aligned" as a result of the tax cut program approved by Congress.
O'Neill said he agreed with private economists' predictions that the tax plan would boost economic growth in the second half of the year. He noted that tax-withholding schedules would be adjusted downward starting next week.