Dollar Climbs Against the Euro

The battered dollar rallied modestly Monday against the euro on some upbeat economic data and after President Bush suggested the currency may have fallen too far recently.

The euro eased to $1.176 in New York from $1.178 on Friday. It had reached a four-year high of $1.191 on Thursday.

The dollar also gained against the Swiss franc and Canadian dollar, among other major currencies.

Bush, meeting over the weekend with other world leaders in Evian, France, and in Russia, said twice that he favors a stronger dollar. In an interview with Russian television, Bush said that “the market, at this point in time, has devalued the dollar, which is contrary to our policy,” according to a report carried in the Wall Street Journal.

His comments appeared to run contrary to what Treasury Secretary John W. Snow has said about the greenback. Snow, at a meeting of finance ministers two weeks ago, said he thought the dollar’s fall against the euro and yen had been “fairly modest.”

Currency markets had taken Snow’s comments as a sign the Bush administration was happy to see the dollar decline because it makes U.S. exports more competitive overseas.

On Monday, Treasury spokesman Rob Nichols insisted there is no disagreement between Bush and Snow over the dollar. “Secretary Snow has said he favors a strong dollar; so did President Bush,” Nichols said. “The president and the secretary are clearly in lock-step on the matter of dollar policy.”

White House spokesman Ari Fleischer said: “The president’s position is that the United States supports a strong dollar and a strong dollar is determined by the market, and that’s why it is important to secure policies that advance growth in the United States.”

The dollar also was helped Monday by a report showing that U.S. manufacturing activity improved in May. In theory, at least, a stronger U.S. economy should attract more foreign capital, helping to lift the dollar.

What was unusual about Bush’s weekend remarks was that he commented publicly at all on the dollar’s value.

The issue is a sensitive one, particularly for European and Japanese trade partners worried about the effect of higher domestic currency values on their ability to sell into the No. 1 consumer market, the United States. A weaker dollar can make foreign goods more expensive for U.S. buyers.

The G8 -- the U.S., Britain, Canada, France, Germany, Italy, Japan and Russia -- left no doubt on Monday that they were closely watching currency markets and were wary of any disorderly movements that could disrupt global growth.

France, as host of the Evian summit, relayed a message to the media that the G8 members saw currency stability as a “very important element” of global growth, according to Catherine Colonna, a spokeswoman for President Jacques Chirac.