Geithner wants strong dollar, will tackle deficit

By Glenn Somerville

TOKYO (Reuters) - Treasury Secretary Timothy Geithner said on Wednesday he believes strongly in the need to maintain a strong dollar and said the United States was determined to get its budget deficit down.

The dollar's decline has been a source of concern in the export-heavy region, especially since top exporter China keeps its currency's value closely managed against the U.S. dollar and so felt less impact on prices for its exports than other Asian nations that let their currencies float freely.

"I believe deeply that it's very important to the United States, to the economic health of the United States, that we maintain a strong dollar," Geithner said in a meeting with Japanese reporters at the U.S. embassy.

The Treasury chief was visiting Japan before heading on Wednesday night to Singapore to join a meeting of finance ministers from the 21-nation Asia-Pacific Economic Cooperation forum (APEC) on Thursday. It was his first trip to Japan since assuming the post in January.

The dollar index, which measures the dollar's value against a basket of six major currencies, has fallen 7.6 percent this year and hit a 15-month low of 74.889 on Wednesday.

Geithner said the United States was well aware it must work to keep investors' confidence in U.S. economic policymaking.

"We bear a special responsibility for trying to make sure that we are implementing policies in the United States that will sustain confidence ... in investors around the world that as growth recovers and growth strengthens that we're going to bring our fiscal position back to a sustainable balance," he said.

The U.S. budget deficit soared to a record $1.4 trillion in the fiscal year that ended on September 30 and is expected to be about the same this fiscal year.

Geithner talked with reporters after meeting Prime Minister Yukio Hatoyama and before a lunch meeting with Bank of Japan Governor Masaaki Shirakawa. He met Finance Minister Hirohisa Fujii on Tuesday night.

In a separate interview with public broadcaster NHK on Wednesday, Geithner said that while the U.S. economy was growing again, the recovery was still in the very early stages.

"It's a very early stage of recovery, again this is a very tough economy," Geithner said.

"Unemployment is really very, very high, exceptionally higher in the United States. It's still rising. It's probably going to rise for a bit longer, until you see a longer period of growth take hold."

The U.S. jobless rate jumped to a 26- year high of 10.2 percent in October and economists polled by Reuters expect it to hit 10.5 percent by the middle of next year.

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Geithner said he was encouraged by Tokyo's commitment to shift its policy toward growth that comes from more spending at home rather than from selling abroad -- a policy that the Obama administration is encouraging throughout Asia.