Dollar falls after treasury secretary's comments

The dollar was on the back foot today after seesawing on comments by US treasury secretary Mr Paul O'Neill which caused confusion…

The dollar was on the back foot today after seesawing on comments by US treasury secretary Mr Paul O'Neill which caused confusion over Washington's strong dollar policy.

The dollar fell after German newspaper

Frankurter Allgemeine Zeitung

quoted Mr O'Neill as saying in an interview that his country was not pursuing a strong dollar policy.

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"The initial reaction to Mr O'Neill's comments was one of panic and the dollar fell, but the message he was trying to send was that governments can't control the currency and economic fundamentals do," said Mr Shahab Jalinoos, strategist at UBS Warburg.

With a meeting of Group of Seven finance ministers in Italy due at the weekend, traders said the market will be keenly awaiting a further clarification of where Mr O'Neill stands on foreign exchange policy.