Many forex traders are confused as to the reasons why the US dollar has suddenly risen from the dead, bouncing back from the lows of 76.00 on the USD index chart, to currently trade at 77.92 against a basket of other currencies, reversing recent strong trends for pairs such as the eur/usd and aud/usd. The answer is Tim Geithner, who has finally broken his silence to comment on the increasing weakness of the US dollar, and in particular whether it is the declared intent of the US authorities to weaken the currency further with QE2, creating an unfair advantage in the so called "race to the bottom".
"It is very important for people to understand that the United States of America and no country around the world can devalue its way to prosperity, to [be] competitive," he said. "It is not a viable, feasible strategy."
The dollar strengthened against a basket of currencies after his comments to business leader in California's Silicon Valley on Monday, including the yen, euro and sterling.
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US Treasury chief Timothy Geithner says America will not engage in dollar devaluation
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