---- by Christopher Anstey ---- WASHINGTON (AFX) - President George Bush's statement that the dollar's price should be set by the market opens the door to further selling, analysts said, although they do not amount to any real change in the administration's foreign exchange policy. "I would say it certainly opens the door to a weaker dollar," said Robert Hormats, Vice Chairman of Goldman Sachs International, given the current environment. Although Bush's remarks do not constitute a specific endorsement of the dollar's decline through the spring, "It shows (the Bush administration) have reconciled themselves to a weaker dollar," Hormats said. The administration's dollar policy boils down to a remark made by Treasury Secretary Paul O'Neill shortly after taking office last year: that the US supports a strong dollar as a reflection of strong fundamentals, analysts said. This is a subtle change from the Clinton administration line, because it means the strong dollar policy is not a policy as such, but a goal as a reflection of a strong economy, analysts noted. "Prior administrations' desire to use the dollar in international economic policy is the wrong yardstick for O'Neill's Treasury," said David Gilmore, partner at Foreign Exchange Analytics. The fact that O'Neill and Bush both fail to stick with the line established by the previous Clinton administration that "a strong dollar is in the national interest" leaves markets questioning the policy. "Many, if not most, market participants have doubted the current Administration's commitment to the strong dollar policy, despite repeated claims to the contrary by Treasury Secretary O'Neill," noted Marc Chandler, chief currency strategist at HSBC. "Last night's comments on the eve of the G7 economic summit are being seen by many observers as confirmation of their skepticism," Chandler said. Bush said yesterday that "my position is that the dollar will seek its level based upon market forces and based upon whether or not our country can rein in spending, can recover, can revitalise our manufacturing base." Chandler explained that "without repeating the strong dollar mantra, and in the current environment, the comments cannot help but encourage dollar sales." Bush's remarks reflect a lack of clear lines of communication on the dollar issue in the current administration, said Jin Saito, Vice President at the independent market analysis firm The G7 Group. "What it clearly reflects is the absence of a clear line of communication," he said, in contrast to the Clinton administration, where dollar policy was solely in the mouth of Treasury Secretaries Robert Rubin and successor Larry Summers. "Clinton never muddled through" dollar comments, once the policy was established by Rubin, Saito said, while Bush's remarks "pose a question for the markets." "I don't think (Bush was) trying to signal that a weaker dollar is fine with us," Saito said, adding that "I'm sure he did not realise what's going on in the market." Hormats noted that Bush's remarks themselves are difficult to dissect, particularly as he refers to the "country's" ability to rein in spending. Bush has already endorsed higher spending and lower taxes, which have pushed the federal budget into deficit, Hormats noted. "I can't figure out what he's getting at," Hormats said. For their part, the National Association of Manufacturers (NAM) said Bush's remark amounted to acquiescing to demand from business groups that he drop references to the strong dollar policy. "We are enormously pleased, because this is exactly what we've been asking for," said Frank Vargo, Vice President at the NAM. Ultimately, the administration is seen being comfortable in private with the dollar's relatively orderly drop in recent months, analysts concluded. If there were a rapid fall in the dollar in tandem with a rout in US financial assets that was attributed to a crisis of confidence in the dollar itself, the administration would be forced to intervene, Saito added. Regardless of the commitment to let the market determine values, "they would have to intervene" if the dollar fell dramatically, Hormats agreed. Saito concluded that "we're nowhere near that point" yet.