Paulson says, again, strong dollar in U.S. interest

WASHINGTON (Reuters) - U.S. Treasury Secretary Henry Paulson said twice on Thursday that a strong dollar was in the U.S. national interest and long-term economic fundamentals remained healthy.

In an interview on National Public Radio, Paulson said the Bush administration's stance on the dollar is clear and long-standing.

"We've taken quite a clear position on this in saying that a strong dollar is in our nation's interest and then recognizing that our economy like any other is going to have its ups and downs," he said.

"But our long-term fundamentals are strong and I believe that they're going to be reflected in the value of our currency here," he said.

The dollar hit fresh lows against the euro on Thursday in a continuing slide that has set European policy-makers nerves on edge as the euro strengthened against the dollar to $1.5644, posing a threat to the region's ability to sell its goods competitively in America.

Paulson earlier said the United States backs a strong dollar while answering questions after he unveiled recommendations for tightening mortgage lending controls to prevent recurrence of the severe credit crunch now gripping U.S. and global markets.

But Paulson refused to answer a question on NPR whether he thought the U.S. economy has fallen into recession, as many economists maintain.

"We have slowed down very significantly, the American people feel it and know it, we know it and we're watching it very closely," he said. "We're taking the same actions we'd be taking whether we're growing very slowly or whether we're not growing at the present."

Pressed on whether a recession has begun, he replied: "I'm not getting into that."

Paulson's repeated backing for a strong dollar on Thursday came a day after President George W. Bush said he would like to see a stronger dollar and expressed concern that its falling value was one cause of soaring U.S. energy prices.

Bush said the dollar was in a process of "adjusting," and if it were stronger it would help hold down inflation by making prices for imported products cheaper. U.S. crude oil futures hit a record near $111 a barrel on Thursday.

The falling dollar has made U.S. exports more attractive, but European employers were growing increasingly concerned that a strong euro was hurting their prospects. The head of Europe's employers lobby said on Thursday he hoped for action to curb the strength of the euro.

(Reporting by Glenn Somerville; Additional reporting by Emily Kaiser; Editing by Leslie Adler)