Bush gaffe hammers the yen

PRESIDENT George W Bush bolstered his reputation for dropping clangers today, sparking chaos in financial markets in the process. The latest gaffe came when he mixed up devaluation (lowering the exchange rate) and deflation (falling prices), causing traders to dump the Japanese currency.

Bush said Japan's Prime Minister Junichiro Koizumi had discussed 'the devaluation issue' while outlining his plans to revive Japan's economy. What he had meant to say was that they had discussed 'the deflation issue'.

Bush's aides rushed to clear up the confusion. The president had 'misspoken', they said. But the damage had already been done. The yen slumped by half a yen against the dollar.

Bush is not the first president to put his foot in his mouth over currencies. In 1987, Ronald Reagan sent markets into a frenzy after suggesting the dollar could weaken. The White House quickly issued a clarification to say that Reagan had in fact wanted a stable dollar.

Today's incident was the latest in Bush's list of gaffes. He famously pledged during the election campaign to 'put food on your family' and another time pronounced: 'More and more of our imports come from overseas.'