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. Last Updated: 07/27/2016

Paulson Defends Strong Greenback

CHELSEA, Quebec -- U.S. Treasury Secretary Henry Paulson said Friday that a strong dollar was in his country's interest, and stressed that the U.S. economy would continue to grow -- in part because of low inflation and strong global growth.

"I feel very strongly that a strong dollar is in our nation's interest and we believe that currency values should be set in a competitive marketplace based on underlying economic fundamentals," Paulson said.

The dollar hit a new low against the euro Friday as the 13-nation currency broke through $1.41. The dollar also fell further against the Canadian dollar after reaching parity for the first time since 1976 on Thursday.

Paulson reiterated his belief that the U.S. economy was strong.

"In terms of the of the U.S. economy, as I've said a number of times recently, we have a very healthy and diverse economy. The housing slowdown in the U.S. and the capital turbulence that we are going through will take a penalty on our growth, but again, we're diverse and I'm very comfortable that we are going to continue to grow throughout this year," Paulson said.

"We have an economy where inflation is relatively constrained, and in my judgment that's key to prolong economic expansion."

Paulson was speaking at a joint press conference with Canadian Finance Minister Jim Flaherty after the duo signed an update to the Canada-U.S. tax treaty.

Following the meeting, Flaherty brushed aside concerns that a continued rise in the Canadian currency could lead to a major recession in Canada's manufacturing sector. Canada's exporters have long benefited from a weaker Canadian dollar, which made their goods cheaper.