Rubin praised for not meddling

Mr. Yen and Mr. Dollar: People Behind Currency Shift

Combine the workaholic habits of an investment banker, the street savvy of a Wall Street trader, a law degree from Harvard, and the financial clout of the world's largest economy....

And what you get is Robert Rubin, Treasury Secretary and official spokesman for the revived dollar.

With his steady chant - "it is in the interest of the United States that the dollar remain strong" - Mr. Rubin has helped to bolster confidence in the buck. He has done it with little more than his Cheshire-cat smile and an occasional cheerleading comment. It's been a year and a half since the US government intervened in currency markets.

"You have to give him high grades for not trying to interfere with the markets or the Federal Reserve," says Paul Kasriel, an economist at Northern Trust Company in Chicago. "He has learned what to say and when to say it."

Behind Rubin's decision to let market forces move the currency is his experience running a trading desk at Goldman Sachs & Co., a New York investment firm.

Working with currency markets requires the same good timing, something he learned the hard way at Treasury - trying to halt the dollar's slide when the market trend was down. The speculators ignored him.

Behind Rubin's desire for a strong dollar is the memory of a weak dollar. During the Carter administration, for example, a weak dollar came to symbolize a weak America. Rubin also disagreed with his predecessor at Treasury, Sen. Lloyd Bentsen, who decided to "talk the dollar down" to raise US exports. This can backfire, raising import prices and inflation.

Robert Hormats, a former Rubin colleague at Goldman Sachs, says the Treasury chief would also be aware of the implications of a strong dollar on the US stock and bond markets. A strong US dollar gives foreigners confidence in their US investments. When he was "on the fixed-income [bond] desk, he would pay a lot of attention to the value of the dollar."

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