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Sarkozy: weak dollar not in U.S. interests

WASHINGTON (Reuters) - French President Nicolas Sarkozy told Americans on Tuesday they would be better served by a stronger dollar and urged the Chinese not to undervalue their own yuan currency.

“A great economy needs a great currency,” Sarkozy said in a speech on the first of a two-day visit to Washington.

“You have quality labor, some extraordinary companies, you don’t need a dollar that is too weak,” he told the French American Business Council.

Earlier in the day, the dollar fell to record lows against the euro and a basket of major currencies as the widening fallout of the U.S. home loan crisis took its toll.

Sarkozy has repeatedly railed against the strength of the euro since he took office in May, saying it hurt French exporters, but he and his government have recently changed tack, criticizing instead foreign exchange management abroad.

“We love America, but we love America that is true to its values ... We love an America which supports creators but not speculators, we love an America that believes in free trade but also in honest competition,” he said.

Sarkozy has undertaken a rash of foreign visits since becoming president and is due to travel to China this month, where he promised to take up the question of the yuan with Chinese leaders.

“I will say to our Chinese friends, ‘you have been spectacularly successful ... you don’t need an undervalued currency to win’,” he said.

“It is not even useful. It creates imbalances and, at the end of the day, these imbalances impact you too,” he added.

Sarkozy is due to attend a dinner hosted by President George W. Bush on Tuesday and address Congress on Wednesday.

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