To: Mark Fowler who wrote (118118 ) 2/19/2001 1:03:57 AM From: H James Morris Respond to of 164684 Mark, with me holding calls on the euro this is the last thing I wanted to hear! >Last Updated: February 19 2001 04:20GMT World currency markets are set to test on Monday the most emphatic attempt yet by Paul O'Neill, the new US Treasury secretary, to demonstrate the Bush administration's commitment to a strong dollar. Mr O'Neill used the opportunity of the weekend's meeting of finance ministers and central bank governors of 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 new Treasury chief in Frankfurter Allgemeine Zeitung, the German daily, was interpreted by traders as indicating his lack of enthusiasm for a strong commitment to the US currency. 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." The Treasury secretary also told reporters that none of the other G7 finance ministers and central bankers had questioned him about the dollar policy during the meetings on Saturday, where discussion ranged across the outlook for global growth, reform of international financial institutions, reducing global poverty and Russia's continuing financial difficulties. Mr O'Neill pronounced himself pleased with his first G7 session, where he chose not to follow the lead of his predecessor, Larry Summers, who often used the meetings to push the Japanese and European governments to do more to restructure their economies. 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 thefund's forecast is correct, it would make 2001 the worst performance by the US economy since the recession of 1990-91. The US Federal Reserve said last week its economists expect the economy to expand by 2 to 2.6 per cent this year. In the European Union, prospects were seen as much brighter. Wim Duisenberg, president of the European Central Bank, said the IMF shared his prediction that the euro-zone would grow by around 3 per cent this year and in 2002. In a signal that the ECB might be in no hurry to cut interest rates, Mr Duisenberg added: "This rate of growth is still considerably in excess of the trend rate of growth observed in Europe over the past 25 years". Didier Reynders, the Belgian finance minister who was for the first time present at the G7 as a representative of all 12 euro-zone members, also spoke up for his currency, saying he believed "a strong euro is in the interest of Europe".