WASHINGTON, Oct 18: Federal Reserve Chairman Alan Greenspan said on Wednesday he does not expect a round of foreign currency devaluation in the aftermath of the Sept. 11 attacks on the United States.

Asked by a member of the congressional Joint Economic Committee whether a round of currency devaluations abroad would impact US manufacturers, he said:

I don’t think so, because remember that exchange rates are bilateral, they really represent the valuation of the currency of one country versus another and if we are all being impacted equally, as we are effectively, by the events of Sept 11, that in and of itself it should not have a material impact.

Greenspan noted that currencies have been a haven of stability since the Sept. 11 attacks.

In fact currencies have been one of the few stable financial prices that we’ve seen in the period since Sept 11, he told the committee.

Despite facing “enormous” pressures since late last year, the US economy has remained standing, Federal Reserve Chairman Alan Greenspan said on Wednesday.

However, it remains to be seen what further impacts there will be on the economy, including the after-effects of the Sept. 11 attacks on New York and Washington, he said during a question and answer period before the Congressional Joint Economic Committee.

Monetary policy has had a “significant” impact to date, but how much impact is yet to come from the nine rate cuts that the Fed has made since the start of the year, including two since the attacks on the World Trade Center and the Pentagon, is uncertain, he said.

Federal Reserve Chairman Alan Greenspan on Wednesday said Congress, in patching together a plan to prop up the US economy, should be wary of mixing long- and short-term measures.

In an appearance before the Joint Economic Committee on Capitol Hill, he said measures aimed at boosting the economy in the short-term have little effect over the long-term outlook while those aimed at long-term growth have little effect in the short-term.

I’m not sure that one benefits in any way that I can be aware of by mixing the two. That’s what I’m saying, he said.

Greenspan also said the decision of the type of stimulus to be enacted lies with lawmakers. That’s a policy judgment which the Congress is going to make, he said.

Federal Reserve Chairman Alan Greenspan on Wednesday expressed doubts about the immediate boost a cut in the capital gains tax cut would provide to the economy.

In an appearance before the Joint Economic Committee, Greenspan said he supported the scrapping of the capital gains tax and “double taxation” of stock dividends, but he said there was little evidence cutting taxes on gains in stocks and financial assets would have any real short-term impact.

Cutting capital gains taxes has been one option under discussion by lawmakers while they craft a fiscal stimulus package aimed at propping up the economy in the wake of the Sept. 11 attacks on the US—Reuters