Bush pledges to address weak dollar

President George W Bush said Wednesday a renewed drive to cut US budget deficits should help the weak dollar and that Tuesday's Federal Reserve interest rate hike showed Alan Greenspan's awareness of the greenback's plight.

Bush made the comments after talks with Italian Prime Minister Silvio Berlusconi, who came to Washington intent on telling Bush of his worries about the euro currency's export sapping strength against the dollar.

The dollar's weakness is troubling Europe because the relatively lofty euro drives up the costs of its exports to the US and makes US goods more attractive there.

It was rare for Bush to speak at length about the dollar and equally unusual for him to cite a Fed action.

He said Tuesday's rate increase, the Fed's fifth since June, was 'a signal to world markets that the chairman (Greenspan) is also aware of the relative currency valuations between the euro and the dollar."

Treasury Secretary John Snow said Bush was simply reaffirming the administration's strong dollar stance while outlining the fundamentals that underpin the policy.

"Deficit reduction -- short-term, long-term -- and obviously good monetary policy helps create the foundation for a strong economy," Snow said on CNBC television, adding that the Fed has pursued "good, sound monetary policy."

The Fed declined to comment.

Ted Truman, a senior fellow at the Institute for International Economics who served as a Treasury official in the Clinton administration, said he did not think Bush meant the Fed raised rates to support the dollar.