NEW YORK, United States – BEN Bernanke and Tim Geithner keep saying that they support a strong dollar. Now that we have it, they should eat their words.

The dollar has surged to a nine-month high against the euro, and is also rising against other major currencies. If it keeps strengthening, that could damage the already fragile US economic recovery.

Gains in the US currency will hurt exports, which are big contributors to the US economy right now. American companies will find it more expensive to sell goods and services abroad, and imports here will be cheaper — good for consumers, but bad for businesses.

President Barack Obama, in his State of the Union address in late January, set out a goal of doubling exports over the next five years, which he said would create two million jobs.

A strong dollar would wreck that plan. Every one per cent increase in the dollar, averaged against other major currencies, knocks US exports down by about US$20 billion annually and destroys some 150,000 jobs, according to the Peterson Institute for International Economics, a Washington-based nonpartisan research group.

Ouch is right.

“Americans are spent out, unemployed and can’t use their homes as ATMs,” said David Gilmore, a partner at Foreign Exchange Analytics in Essex, Connecticut. “We need foreigners to pick up the slack, but a strong dollar certainly won’t help that.”

All this may sound somewhat illogical. Usually stronger means better, right? At times, that’s true, but not now.

Today, it takes about US$1.36 to buy one euro. Three months ago, it took US$1.51 to buy one euro. That means a dollar will now go 10 per cent further than in November if you were exchanging the two currencies.

If you’re planning a trip to Europe, then this is good news because you’ll get more for your money. It’s also a boon to US consumers who can buy foreign goods for less. Investors like when the dollar is strong because it tends to bolster dollar-denominated assets like US stocks and bonds.

The flip side is that foreigners will have to spend 10 per cent more to purchase US goods. An American automaker who wants to sell a US$20,000 car abroad would charge euro14,700 at today’s rates compared with euro13,245 in November.

That’s why a weak dollar, not a stronger one, would be better for US exporters. American companies could charge less than the local competition in foreign markets, and imports to the United States would be more expensive, which would make US-made goods more competitive at home, too.

Instead, we have US goods costing more abroad and imports costing less here, which means American companies have to discount everywhere in order to compete.

And yet top US officials still support a stronger dollar.

“When the world was most at risk and most scared, people were still putting their resources in dollars and Treasuries, and we want to preserve that,” Treasury Secretary Geithner said during a Senate Finance Committee hearing on February 2.

Federal Reserve Chairman Bernanke also has voiced his support for a strong dollar in recent months.

They’ve gotten what they’ve wanted. A rebounding US economy, which rose 5.7 per cent in the fourth quarter, has helped ignite a dollar rally.

A bigger force behind the dollar’s rise has been economic woes in other parts of the world, namely Europe. Worries that Greece could default on its debt and other countries including Spain and Portugal could also be vulnerable to collapse, has knocked down the euro to its weakest level since last May.

Investors don’t want to hold currencies in markets where there could be financial turmoil. The dollar has long been considered the market’s favoured safe-haven currency.

The US Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, has risen about 7.5 per cent since November.

The trouble with the dollar’s gains is that it puts a major driver of US economic growth at risk. The United States sells about US$1.5-trillion worth of goods and services annually to the rest of the world, according to the Peterson Institute.

Of the 5.7 per cent growth rate in the overall US economy in the fourth quarter, exports added 1.9 per centage points.

“We are a country that is now counting on export growth to lead us,” says Nigel Gault, chief US economist at the consulting firm Global Insight in Lexington, Massachusetts.

A rising dollar also hurts businesses reliant on foreign markets. Standard & Poor’s 500 companies derive on average about half their sales from abroad.

It’s not just the higher prices for their goods that affects companies with foreign operations, but they also stand to make less when they convert what they’ve earned aboard back into dollars and bring their profits home.

A company that makes euro600 million in sales in Europe would see that convert to US$882 million at the current exchange rate. Three months ago, it would have been valued at US$906 million.

Pfizer Inc, the world’s largest pharmaceutical company, was among the first to warn about the effect of the rising dollar. It’s estimating that the hit from the dollar’s gains could have as much as 6 cents from its 2010 earnings. That will push its projected full-year earnings to US$2.10 to US$2.20 a share, below analysts’ expectations.