U.S. Treasury Secretary John Snow praised China on Wednesday for moving toward market discipline for its currency, and said the United States remains committed to letting the market find the value for the ailing dollar. Speaking to reporters in London as the euro hit an all-time high against the greenback of US$1.3035, Snow avoided any direct comment on the dollar's value. "The question was, why do I support a strong dollar policy? The answer is because it is our policy," Snow said. "We believe in open, competitive currency markets. We think the world functions best with free trade and free capital flows. Nobody has ever devalued their way to prosperity." Snow said. Snow said China's announcement last month that it was raising two key interest rates for the first time in more than nine years represented the latest example of efforts by the Chinese to move toward "a more systematic management of monetary policy." "I believe that these actions represent significant steps consistent with China's move to a flexible and market-based exchange rate," Snow said in an address to the Royal Institute of International Affairs in London. For more than a year, the Bush administration has been pressuring China to stop linking its currency at a fixed rate to the U.S. dollar, which American manufacturers contend has resulted in the Chinese currency being undervalued by as much as 40 percent. That, in turn, gives Chinese products a tremendous competitive advantage against American goods. --more 1351 Local Time 1051 GMT
