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U.S. wants to keep options open on dollar: Watanabe Masayuki Kitano and Shinji Kitamura TOKYO (Reuters) - The United States probably wants to leave open the option of dollar-buying intervention as a tool to temper inflation, since it could be hard to raise interest rates as the economy slows, Japan's former currency tsar said on Tuesday. The U.S. economy is slowing down while conditions in financial markets have still not returned to normal, and it would be hard for interest rates to be raised in the United States in such an environment, said Hiroshi Watanabe, who served as Japan's vice finance minister for international affairs until last July. "But on the other hand, if inflation is rising then there is a need to rein in rises in import prices," Watanabe said at a seminar hosted by Bank of America in Tokyo.
(Article continues below) "I think (U.S. Treasury Secretary Henry) Paulson is probably thinking that there is no need to say that they will not move currencies at a time when interest rates cannot be moved," he said. "I think their assessment is that there is no need, at a time when there are limited tools and the left hand can't be used, to say that the right hand can't be used either," Watanabe said, but added that whether the U.S. would actually resort to intervention was a different issue. Investors have detected a shift in Washington's view on the dollar in a flurry of comments by U.S. authorities this month.
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