World currency markets are today set to test the most emphatic attempt yet by Mr Paul O'Neill, the new US treasury secretary, to demonstrate the Bush administration's commitment to a strong dollar.
Mr O'Neill used the weekend's meeting in Palermo, Sicily, of finance ministers and central bank governors from the group of seven leading industrialised nations to try to kill any remaining suspicion that he might not be a wholehearted defender of the US currency.
The dollar fell sharply against the euro on Friday, after an interview with the treasury chief in a German newspaper was interpreted by traders as indicating his lack of enthusiasm for a strong commitment.
But a clearly irritated Mr O'Neill told reporters on Saturday that he stood firmly in support of a strong dollar.
"If I decide to change, I will hire Yankee Stadium together with marching bands and announce it," he said. "Until you hear the bands striking up, you should know the policy has not changed."
He also said none of the other G7 finance ministers and central bankers had questioned him about the dollar policy. Discussion had ranged across the outlook for global growth, reform of international financial institutions, reducing poverty and Russia's continuing difficulties.
Mr O'Neill pronounced himself pleased with his first G7 session. But for the first time in at least five years, the US treasury secretary had to reassure other officials that America's economy would not drag the world into recession.
The International Monetary Fund has significantly downgraded its forecast for US growth this year, to just 1.7 per cent from an estimate last autumn of 3.2 per cent.
If the fund's forecast is correct, it would make 2001 the worst performance by the US economy since the recession of 1990-91.
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