Paulson: oil demand/supply cause for price rise

WASHINGTON (Reuters) - Treasury Secretary Henry Paulson on Thursday said that a rise in oil prices is a reflection of tight supplies and growing global demand and is not driven by market speculators.

"Again, I don't think this is about financial investors, I think this is about long-term supply and demand," Paulson said in an interview on CNBC cable television, calling the recent rise in oil prices "unpleasant."

The Treasury secretary emphasized that the long-term fundamentals of the U.S. economy are strong.

He reiterated that the United States has a strong dollar policy and that economic fundamentals will be reflected in the currency's value.

"We have a strong dollar policy," Paulson said. "The long-term strength (of the U.S. economy) is going to be reflected in the value of our currency. Our policy has got to be a policy that's going to increase confidence in the U.S. economy. Right now we're in a tough patch."

Paulson repeated that there are some improvements in credit markets and said financial markets are closer to the end of this crisis than the beginning. At the same time, he lauded efforts in Congress to boost oversight of housing finance giants Fannie Mae and Freddie Mac.

"I think it is so important that we have a strong, credible, independent regulator for Fannie Mae and Freddie Mac. These institutions now touch about 80 percent of the mortgage origination in this country. A strong regulator will really add to the confidence surrounding these organizations and the secondary mortgage market," Paulson said.

"That ultimately means lower rates and more access to mortgage financing, which I think is going to be helpful in shortening the correction in the housing market," he added.

(Reporting by Emily Kaiser and Joanne Morrison; Editing by Jonathan Oatis)