US President George Bush and German Chancellor Gerhard Schröder put their bitter feud over the Iraq war behind them yesterday. However, Mr Schröder brought up a new problem: the dollar's weakness against the euro.
"We've had differences in the past. But there's nothing wrong with friends having differences and we are both committed to put the differences behind us and move forward," Mr Bush told reporters as he and Mr Schröder sat side-by-side in the Oval Office.
Mr Schröder said that he told Mr Bush of German concerns about the weakness of the dollar versus the euro, which Germany feels is depressing German exports.
The official US position on the dollar, which Mr Schröder said Mr Bush repeated to him, is that the administration backs a strong US currency.
However, a cheaper dollar has helped the United States cope with its record trade imbalance because it makes US-produced exports cheaper in foreign markets.
Mr Schröder said Bush told him that, while he is interested in a strong dollar, governments only have a limited ability to influence currencies.
"The President made clear that he is interested politically in a strong dollar, not a weak dollar," Mr Schröder said.
"I told him that the euro-dollar rate is naturally causing concerns for us."
He said that Mr Bush told him that he plans to work on reducing the twin US budget and current account deficits in a certain amount of time, which he said were factors for the current dollar weakness.
A White House spokesman, Mr Scott McClellan, said Mr Bush assured Mr Schröder the United States is committed to a strong dollar.
Meanwhile, the US economy grew a little more quickly than first thought at the end of last year as business investment jumped, official figures showed yesterday.
US gross domestic product was revised upward to a 4.1 per cent annual growth rate for the fourth quarter, just above the initial reading last month of 4 per cent, according to the Commerce Department.
That confounded forecasts of a downward revision to 3.6 per cent and showed the strongest back-to-back quarters since 1984, beating even the dramatic gains of the late-1990s boom. - (Financial Times Service, Reuters)
