From The Guardian February 19, 2002

Gaffe-prone US president, George Bush, made an expensive slip of the tongue in Tokyo yesterday, sparking a run on the yen by mixing up "devaluation" and "deflation".

Mr Bush emerged from talks with the Japanese prime minister, Junichiro Koizumi, to say they had discussed "the devaluation issue". Officials rushed to point out that the president had meant "the deflation issue", but not before the dollar had risen by about a quarter of a yen against the Japanese currency.

Traders feared that Mr Bush was hinting at opposition to the cheap yen, which US car dealers are concerned could lose them business, but the Japanese currency clawed back most of its value once the president's blunder had been corrected.

"The meeting did little to change the market's view that the US is not particularly concerned with the yen's weakness," said Shahab Jalinoos, currency strategist at UBS Warburg.

Mr Bush is not the only US president to rattle the foreign exchange markets without meaning too. In 1987 at the Venice summit of the Group of Seven industrialised nations Ronald Reagan said that the US was committed to a stable dollar but then added "it could be within reason that there could still be some lowering of the value in relation to other currencies".

With the dollar all over the place White House officials were forced to mount a damage limitation exercise insisting that Mr Reagan really did want a stable dollar.

Apart from the slip over devaluation, there was little to excite the markets in Mr Bush's comments in Tokyo, which analysts said were primarily aimed at boosting the fragile public popularity of Mr Koizumi.

"I'm not here to give advice. I'm here to lend support," Mr Bush said. "I'm confident in this man's leadership ability, I'm confident in his strategy, and I'm confident in his desire to implement that strategy. When he implements the strategy it will help Japan's economy a lot."