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The dollar rose against major currencies Tuesday as European Central Bank president Jean-Claude Trichet supported Federal Reserve chairman Ben Bernanke on strong-dollar policy.
Trichet told French newspaper Le Monde that Bernanke's comments on the dollar were "very important," and the euro was not designed to replace the dollar.
"The euro wasn't created to compete with the dollar or to be a substitute to the dollar as a reserve currency," Trichet said, "The ECB isn't campaigning for the international use of the euro."
Trichet also said at a banking conference in Frankfurt on Tuesday that he was "fully aligned" to Bernanke's statement. "I believe that the strength of the dollar within the set of floating currencies is in the interest not only of the United States, but of the entire international community," he said.
Eurogroup chairman Jean-Claude Juncker said Trichet was "perfectly right" to highlight Bernanke's comments. "We think, like our American friends, that the strong dollar is in the interest of the U.S. economy," said the head of the group of euro zone finance ministers.
Juncker did not believe the euro level was worrying, but he noted that exchange rate volatility in recent months "is not welcome."
Bernanke said on Monday that the Fed will monitor the sliding U.S. dollar and reiterated that interest rated will be kept at low levels for a while.
"We are attentive to the implications of changes in the value of the dollar and will continue to formulate policy to guard against risks to our dual mandate to foster both maximum employment and price stability," Bernanke said in remarks to the Economic Club of New York.
The greenback also gained some strength on Tuesday from reports showing that U.S. industrial production was weaker-than-expected and foreign demand for U.S. Treasuries remained strong.
Industrial Production rose a mere 0.1 percent in October, according to data from the Fed. The September rise was revised down from 0.7 percent to 0.6 percent. Capacity utilization for total industry moved up 0.2 percentage point to 70.7 percent in October.
Manufacturing production moved down 0.1 percent, after a rise of 0.8 percent in September. This was the first drop in manufacturing production since June. With the end for the 'cash for clunkers' program, autos output fell 1.7 percent in October, compared with an 8.1 percent rise in the previous month.
The U.S. Treasury reported that foreign investors' appetite for U.S. securities remained strong, with net foreign purchases of long-term assets of 40.7 billion dollars in September. It is the fourth straight month of positive net foreign inflows into long-term securities. Net buying of U.S. Treasury bonds and notes by foreigners increased to 44.7 billion dollars after a net acquisition of 28.0 billion dollars in August.
The euro bought 1.4835 dollars in late New York trading compared with 1.4987 dollars it bought late Monday. The pound fell to 1.6797 dollars from 1.6836 dollars.
The dollar rose to 1.0524 Canadian dollars from 1.0467 Canadian dollars, and rose to 1.0175 Swiss francs from 1.0068 Swiss francs. It rose to 89.32 Japanese yen from 88.98 Japanese yen.
Source: Xinhua
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