Paulson says more market 'turmoil' ahead

US Treasury Secretary Henry Paulson said it will take "months" before financial-market turmoil ends and that he "very strongly" supports a strong dollar.

"We're talking about months and there will continue to be bumps in the road", Paulson said in response to questions after giving a speech in Abu Dhabi at the end of a four-day day trip to the Persian Gulf. Paulson was repeatedly asked about what the US is doing about the weakness in the dollar, which has fallen 14 percent against the euro in the past year.

"Markets respond to economic fundamentals," he said. "Every economy is going to have its ups and downs, and the US is going through a tough period. I believe the long-term economic fundamentals will be reflected in our currency."

Paulson's trip comes as US financial institutions, reeling from the subprime mortgage crisis, have been forced to raise billions of dollars in fresh capital, some from the Middle East. He sought to assuage concerns raised by a 2006 Congressional outcry that prompted a Dubai company to abandon its bid to buy six US ports.

"I have met with many leaders from the Middle East who ask if the United States really continues to welcome foreign investment," Paulson said in his speech to the US-United Arab Emirates Business Council. "As we seek to open new markets abroad, America will keep our markets open at home to investment from private firms and from sovereign wealth funds."

The collapse of the US subprime mortgage market and subsequent financial upheaval has led to more than $386 billion in asset writedowns and credit losses worldwide.

Agencies

(China Daily 06/03/2008 page17)