WASHINGTON (AFX) - Former Treasury Secretary Robert Rubin said the Bush administration's continuation of the Clinton administration's oft-articulated strong dollar policy is wise.
"Modifying our strong dollar policy could adversely affect inflation, interest rates and capital inflows and would lessen the favorability of our terms of exchange with the rest of the world," Rubin told the Senate Banking Economic Policy Subcommittee. The comments come as the Bush administration is under increasing pressure from US manufacturers to drop the longheld strong-dollar policy, which the manufacturers say is hurting their exports.
But Treasury Secretary Paul O'Neill has said "great companies" do not need to worry about a stronger or weaker dollar because they either have top rate management of their core businesses or they hedge against currency fluctuations to minimize risk.
The former Clinton administration official, now a Citigroup executive, said the strong dollar has boosted productivity growth in the US and increased the standard of living for Americans. He repeated his longstanding position that the large trade deficit is not a problem in the short run, but that the US should ultimately work to reduce the size of the deficit, without giving any specific timeframes.
"While we should be able to sustain this deficit for an extended period because of the relative size and strength of our economy, it would be desirable over time to greatly reduce this imbalance," Rubin said.