The White House, in an apparent coordinated effort with the Federal Reserve Board, Monday moved to try to halt the surge of the dollar abroad, declaring that a further rise could "undermine international efforts to reduce global trade imbalances."
The statement, the first time the White House has commented directly on the dollar since President Bush took office, appeared to be tied to a late-morning selloff of dollars by the Federal Reserve in international currency markets.And it followed hectic trading in European markets, during which the Fed and counterpart central banks of Japan, Britain, West Germany and other European nations reportedly were making heavy sales of dollars.
Selling dollars can help drive their price down against other currencies.
David Wyss, chief financial economist at Data Resources Inc., said the Fed began selling off dollars "about the time of the statement. It was calculated to have a combined impact. Unfortunately, the market is shrugging it off."
Monday's White House statement was clearly designed to invite international action to halt the dollar's rise, apparently including heavier intervention by the Federal Reserve and other central banks to stabilize the currency.
A statement read by deputy White House press secretary Roman Popadiuk said the climbing dollar "is a matter of concern" that "has also prompted questioning of the administration's commitment to the process of economic policy coordination" among the Group of Seven major industrial democracies.