US Treasury Secretary Henry Paulson said last night he declared his desire for a strong US dollar to his Group of Seven counterparts, and they reached a "real affirmation" that currency values should be determined in open markets.
"I was very clear - and it didn't surprise anyone because I've always been clear on this with my colleagues - that I believe a strong dollar is in our nation's interest and believe that currency values should be determined based upon underlying economic fundamentals in a competitive marketplace," Mr Paulson told a news conference.
He said there was a "clear consensus" regarding currencies reflected in the G7 communique, which urged China to allow the value of the yuan to rise more quickly.
The communique did not mention the value of the dollar, the euro or the Japanese yen.
Mr Paulson said he welcomed an acknowledgement from China central bank governor Wu Xiaoling earlier on Friday that China needed to pursue structural reforms in its economy, saying he believed Beijing was committed to greater flexibility in its yuan currency.
"We welcome the fact that they think flexibility is a good thing and we just are encouraging them to move a bit quicker and it sounds like they agree," he said.
Mr Paulson said the biggest change in the G7 communique regarding China's yuan was to stress that it should allow accelerated yuan appreciation in light of its rising current account surplus and domestic inflation.
Mr Paulson said he told his G7 colleagues that the downturn in the US housing market was still unfolding. "I explained that looking back three months ago, six months ago, there was more optimism that this market would have turned by now. We explained that this was the biggest risk to the US economy."
He said ministers agreed that progress had been made in returning financial markets to normalcy, but there were some markets, such as the non-agency secondary US mortgage market and the asset-backed commercial paper market, that were still not functioning normally.