Geithner to tout dollar viability

Riyadh/London: Treasury Secretary Timothy Geithner will seek to reassure Gulf Arab states this week that US dollar assets they hold in large quantities remain a strong investment.

A recent decline in Saudi foreign assets shows the purchase of US treasuries by Washington's Gulf allies, five having currencies pegged to the dollar, at levels seen in the past decades should no longer be taken for granted.

Geithner, offering assurances on the United States' ability to pull out of recession, is combining a visit to Saudi Arabia and the United Arab Emirates, the Arab world's largest and second-largest economies, with a trip to Europe.

He is unlikely to encounter any challenge to the dollar's global dominance on his visit to the world's biggest oil exporting region, analysts and diplomats said. China and Russia have expressed concerns about the weakened US currency staying as the only dominant reserve currency. But Beijing, which itself holds large quantities of US assets, suggests any change would be a long-term affair. "The US is looking to reassure Saudi Arabia and the GCC [Gulf Cooperation Council] countries on the outlook of the dollar and US investments given the challenges for the US economy and fiscal position," said Monica Malik, a regional economist at EFG-Hermes in Dubai.

Riyadh-based analyst John Sfakianakis added the trip was "an important customer visit to one of the biggest holders of US government paper and a seminal dollar supporter".

US officials played down expectations that Geithner would pursue any major initiatives, but indicated that one of the aims was to ensure foreign investors would not lose faith in the United States as a primary target for their investments.