The yen rose near to its highest level since the Bank of Japan stopped intervening in currency markets.

Mr Snow claimed in Dublin at the start of a European tour that the US Government still wanted the dollar to be strong against other currencies. But he carefully added a rider that the markets must decide. In Europe, the euro had fallen back slightly from the $1.30 level it touched last week.

Mr Snow’s remarks came as finance ministers of the eurozone countries disagreed politely over the sharp rise in the single currency at a regular meeting in Brussels. Most member agree with the Jean-Claude Trichet, president of the European Central Bank, who said the euro’s rise against the dollar had been “brutal”. However, Alfred Tacke, Germany’s deputy finance minister, said that the dollar’s rise against the euro appeared to have halted and that the currency’s level was no cause for concern.

Joaquin Almunia, the EU’s monetary commissioner, welcomed Mr Snow’s statement, but said that America needed to back its words on the dollar with actions. Washington has so far shown no interest in emergency domestic action to curb its twin deficits or in a new bout of concerted intervention on the foreign exchanges. Analysts said they would be listening carefully to what Mr Snow said at the impending meeting of the Group of 20 finance ministers in Berlin on Friday.

Chinese officials made it clear over the weekend that the trading partner with the biggest trade surplus with America was in no hurry to let its currency rise against the US dollar. The process could take two years, it was hinted. But Mr Snow welcomed what he saw as moves to adjust the yuan, easing the strain on other dollar rates.

The US Treasury boss put the onus yesterday on the eurozone to improve its own economic performance.

He said that the eurozone had been operating below its potential and that this was holding back the world economy as well as people within the single currency.

The Bank of France underlined this weakness by cutting its forecast for growth in the French economy this year to 2.1 per cent after disappointing third-quarter figures. Outside economists now expect a further deterioration next year, as is also predicted in Germany.

European Commission proposals to ease enforcement of the Stability and Growth Pact when countries exceed the budget deficit limit of 3 per cent of national income made little progress yesterday as member states are deadlocked on the issue.

The issue has become urgent for Greece. Its Government formally admitted yesterday that its predecessor had consistently reported false figures for the country’s budget deficit, which really broke the 3 per cent limit each year from 2000 to 2003.

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