Dollar to remain key reserve currency: Geithner

United States Treasury Secretary Timothy Geithner said the dollar would remain a key reserve currency while he called for greater transparency to energy and commodity markets and said he wanted to find ways to reduce oil-price volatility, in an interview with Al Arabiya aired on Thursday.

After spending two days between Saudi Arabia and the United Arab Emirates, Geithner said he was in the region to underscore President Barack Obama's commandment to strengthen ties with the region and the Muslim world "as the president outlined in his speech in Egypt."

"We have great interest on the security front and the economic front and a long history of cooperation and I'm here to underscore the importance of that to the United States," Geithner told Al Arabiya.

Speaking to Al Arabiya's business correspondent Nadine Hanni, the U.S. Treasury chief said the Gulf nations and the U.S. shared a common interest in bringing better transparency to energy and commodity markets and find ways to reduce volatility.

Geithner stressed the importance of focusing on recovery and said the U.S. was committed to bringing budget deficits down to a sustainable level. As for when fiscal sustainability would be back in place, Geithner said the most important thing at this point in time was to bring growth back.

Geithner reiterated his country's commitment to a strong dollar and said he had heard no concern about the dollar's status in talks with Gulf business and government leaders.

"My view and that is the view I have heard expressed here is that the dollar was likely to remain the principle reserve currency," the U.S. treasury chief said.

Brushing over a comment by Hanni that oil is priced in dollars, Geithner said "it is in the economic interest of the world that we sustain that basic anchor of the system."

My view and that is the view I have heard expressed here is that the dollar was likely to remain the principle reserve currency

Timothy Geithner

Treasury securities

Geithner said in response to questions that he was not concerned about the level of Saudi holdings of U.S. Treasury securities and noted that when risks are high investors generally want the safest securities they can find.

A senior U.S. Treasury official said Geithner held talks with officials who head the Abu Dhabi Investment Authority, or ADIA, the world's largest sovereign wealth fund, but said no pitch was made for the fund to step up its investments in the United States.

Five of the six Arab states that comprise the Gulf Cooperation Council -- Saudi Arabia, the UAE, Bahrain, Qatar and Oman -- peg their currencies to the dollar. The sixth, Kuwait, uses a basket heavily weighted in dollars.

Oil prices were on the agenda in both producing countries but Geithner refused to comment on current price levels. He did say, though, that it was in the Gulf's interest and everyone else's to try to nurture "tentative signs of recovery" in the global economy.

He said that Gulf officials had expressed "quite substantial confidence in the broad strategy" that the Obama administration was pursuing to try to reinvigorate the U.S. economy and said he had assured them that budget deficits will be ratcheted down as soon as possible.

The U.S. budget deficit in the first nine months of fiscal 2009 has topped $1 trillion.