The dollar has been under pressure

Speaking on the eve of a visit to Asia, Mr Bush told reporters he would raise the issue during talks next week with Japanese and Chinese leaders.

"I'm going to say that were there's trade imbalances, countries need to be mindful that we expect there to be fair trade," he said.

"We expect the markets to reflect the true value of the currency."

Japan had adopted a policy of periodically selling yen in an effort to keep the dollar-yen exchange rate at a level which favours export sales to the US, while China pegs the yuan at an artificially low rate against the US currency.

US manufacturers claim that the Chinese yuan is undervalued by as much as 40%, making it difficult for them to compete with their Chinese counterparts at home and abroad.

By some estimates, American firms sell just $1 in China for every $6 of Chinese products sold in the US.

Strong dollar pledge

On Tuesday, a group of US senators wrote to Mr Bush urging him to take action on the currency issue in an effort to reverse a swathe of US job losses, especially in the manufacturing sector.

The Bush administration is reported to be worried that the steady loss of factory jobs - total lay offs are estimated at 2.7 million over the past 3 years - could cost it votes in next year's presidential election.

Mr Bush also insisted that his government had not wavered from the traditional US policy of maintaining the dollar's value against that of other world currencies.

"I'm for a strong dollar policy. We've had a strong dollar policy in this administration," he said.

His remarks counter recent market speculation that the US government would prefer a weaker currency in order to stimulate the economy and mend its widening current account deficit.

That speculation has contributed to a steep decline in the value of the dollar against the euro and the yen in the past three months.

The dollar was higher in late morning trade in New York, climbing 0.4% on the day to 109.4 yen.

Mr Bush's trip to Asia, which begins on Wednesday, will include visits to Japan, the Philippines, Thailand, Singapore, Indonesia, and Australia.