The weak U.S. dollar is helping to push oil and gasoline prices higher, making imported goods more expensive for Americans and overseas vacations more costly.

At the same time, it's helped U.S. exporters.

There has been a flurry of talk from President Bush and other high-level officials in recent days, some of it seemingly contradictory, about the importance of a "strong dollar."

GAINING STRENGTH

The dollar continued to strengthen against the euro Tuesday as markets digested remarks made by U.S. officials that offered support to the beleaguered American currency.

The 15-nation euro sank to $1.5449 in late New York trading from $1.5652 late Monday. On Friday, the euro was trading at $1.5768.

President Bush, who is touring Europe, said Monday that "a strong dollar is in our nation's interests" and those of the global economy. On Tuesday, however, Mr. Bush essentially rejected the idea of possible government intervention to prop up the dollar's value, saying world economies would end up setting the currency's value.

Comments Monday by U.S. Treasury Secretary Henry Paulson and New York Federal Reserve President Tim Geithner also fed a rally by the dollar, which has been hovering near all-time lows against the euro amid worries over the U.S. economy and an aggressive Fed interest rate-cutting campaign.

"I would never take intervention off the table or any policy tool off the table," Mr. Paulson said. "I just can't speculate about what we will or won't do."

Mr. Geithner said the central bank must pay attention to the dollar and that tighter monetary policy might be necessary.

The rally continued despite a report from the U.S. Commerce Department on Tuesday that the gap between what the U.S. imports and what it sells abroad rose by 7.8 percent in April to $60.9 billion, the largest imbalance since March 2007, driven by an increase in crude oil imports.

The British pound also fell to $1.9531, compared with $1.9751 late Monday, while the dollar strengthened against the Japanese currency, climbing to 107.42 yen from 105.10 yen.

Q & A

Q: What is meant by a "weak" dollar and a "strong" dollar?

A: If the dollar gains against other currencies, it is said to be strengthening. Its buying power increases relative to the other currencies. If its exchange rate declines against other currencies, it is said to be weakening.

Q: What are the advantages of a strong dollar?

A: A strong dollar lowers the price to U.S. consumers of foreign products and services. That helps to keep inflation in check. U.S. consumers also benefit when they travel to foreign countries. It's usually a sign of a strong economy.

Q: And the disadvantages?

A: U.S. products become more expensive overseas, making it harder for U.S. companies to compete in foreign markets. It also makes it harder for foreign investors to buy dollar-based securities at times of heavy U.S. borrowing.

Q: What are the advantages and disadvantages of a weak dollar?

A: U.S. manufacturers and other exporters benefit as American products become relatively cheaper. More foreign tourists can afford to visit the U.S., but it costs more for Americans to travel abroad or buy imported products, fueling inflation. That's pretty much the situation right now.

Q: What's the relationship between a weak dollar, and oil and gasoline prices?

A: It's a direct one, because oil is generally bought and sold in dollars. The more the value of the greenback goes down, the more it costs to buy the same barrel of oil.

Q: How long has this been going on?

A: The dollar has been on an extended slide against other major currencies, especially the euro and the Japanese yen, for about five years - a period during which the U.S. trade deficit with the rest of the world generally continued to widen, requiring more borrowing from abroad and further weakening the dollar. At the same time, the economies of Europe expanded.

Q: What can be done to halt or reverse the slide?

A: Options for government action are limited.

The Fed could start raising interest rates again. That would strengthen the dollar by making U.S. investments more attractive to foreign investors. But it could be a blow to an already fragile economy and increase recession risks.

The other option is for the government to buy U.S. dollars on international currency markets - called intervention - either acting on its own or in concert with other countries.

To do this, the government could draw down its supply of foreign currency stockpiles - on deposit with the New York Federal Reserve Bank - and buy dollars.