Geithner stresses strong dollar's global role

By Glenn Somerville

SINGAPORE (Reuters) - U.S. Treasury Secretary Timothy Geithner offered fresh reassurances to Asian nations that the Obama administration was committed to a strong dollar and to actions aimed at bolstering its value.

"It's very important to the United States that we have a strong dollar," he said at a news conference at the Asia-Pacific Economic Cooperation forum, or APEC in Singapore on Thursday. "As growth recovers, (we will) move our fiscal position back into balance."

Soaring budget deficits, which hit a record $1.4 trillion in fiscal 2009 and will likely be near that in 2010, have weakened the dollar because of huge U.S. borrowing to meet the U.S.'s day-to-day spending needs.

For a graphic on the dollar's downturn, click:

here

As he did throughout the past week, at meetings of the Group of 20 in Scotland last weekend and in Tokyo earlier this week, Geithner acknowledged the U.S. carried a special burden for protecting the currency's value because it is the global reserve currency.

"We bear a special responsibility for being a source of stability and strength in the global economy and we are going to continue to be a voice for reform and we'll be a strong partner for countries in this region," Geithner said.

The dollar has declined 16 percent against a basket of six major currencies from the highs set in March and is down more than 37 percent from a peak in 2001.

Geithner dismissed a suggestion that pouring hundreds of billions of dollars worldwide into spurring economic activity might lay the ground for a future inflationary surge and said finance ministers must stay focused on getting growth on more solid footing.

"Inflation is low and still moderating across most of the major economies," Geithner said. "The most important thing we need to be doing is try to make sure we are reinforcing this early recovery."

The U.S. Treasury chief said there were promising signs of growth returning to the global economy and credited Asia with leading the recovery but stressed it will have to find future growth in sources other than hard-pressed American consumers.

"The rest of the world is going to have to shift to more domestic sources of growth, investment and spending," Geithner said and singled out China as an example that was already starting to happen.

"China's external surplus has fallen very sharply, you're seeing spending and investment in China expand very rapidly," he said. "These are early signs of not just recovery and growth but a fundamentally necessary and important shift in how the global economy grows."

TINKERING WITH THE YUAN

Geithner avoided saying whether he thought China was signaling a willingness to let its yuan currency rise in value more rapidly in a central bank monetary policy report that said Beijing should consider major currencies in guiding the yuan.