"The knee-jerk reaction is that O'Neill's resignation is bad for the dollar," said Marc Chandler, chief global currency strategist at HSBC, according to Agence France-Presse (AFP).

O'Neill had "refused to distance himself from the strong dollar policy of [Robert] Rubin and [Lawrence] Summers," his predecessors as treasury Secretaries in the Clinton administration, Chandler said.

O'Neill also consistently played down the importance of the record U.S. current account deficit, and rebuffed calls from U.S. manufacturers to weaken the strong dollar policy, analysts noted.

On Friday, December 6, U.S. President George W. Bush forced out his Treasury Secretary and his top economic adviser, an abrupt move that reflects heightened White House anxiety over the ailing economy, reported The Washington Post.

Sources said Bush had soured on the gaffe-prone O'Neill last May, after a series of statements had to be explained away, including one contradicting administration doctrine. The sources said Bush decided to get rid of Lindsey after the economist told the Wall Street Journal in mid-September that a war with Iraq could cost as much as $200 billion, at a time when Bush was not confirming he planned any such attack.

Although rumors about a shake-up on the economic team had swirled practically since Bush's inauguration, the timing stunned O'Neill and Lindsey, their aides said.

If O'Neill was pushed, it did not take much of a shove, one Treasury official said. O'Neill, for his part, made it clear this summer that he was growing tired of the infighting and skullduggery that characterized policymaking in Washington. He had spent virtually all of the summer and fall traveling outside the capital, either domestically or internationally, The Post reported.

"He hated the politics of this city," the official said.

"As he told senior staff this morning, there are lots of other important things to do in life," said Treasury spokeswoman Michele Davis. "Back in December of 2000, he was planning to retire and devote himself to improving health care and education in Pittsburgh. I'm sure he will return to those important projects."

O'Neill and Lindsey resigned after Bush decided he needed stronger messengers to communicate with voters, investors and lawmakers as he headed into his reelection race, White House officials said. The officials, however, said Bush plans no change in his fundamental economic policy, which will still emphasize tax cuts.

White House officials said Bush plans to announce the replacements soon, perhaps next week. The officials said the leading candidate to replace Lindsey is Stephen Friedman, a former chairman of the investment bank Goldman, Sachs & Co. O'Neill is likely to be replaced by a corporate executive and the two will be announced together in an effort to convey concern for "both Wall Street and Main Street," a senior aide said.

O'Neill, 67, is the first member of Bush's Cabinet to depart. It is unusual for Bush to push out a top aide, especially one like O'Neill, a former corporate chieftain who shared a gruff camaraderie with the President, said The Post.

O'Neill angrily wrote a three-sentence resignation letter to Bush saying, "I hereby resign my position as secretary of the treasury. It has been a privilege to serve the nation during these challenging times. I thank you for that opportunity."

Bush, for his part, issued a statement that was just as terse. "My economic team has worked with me to craft and implement an economic agenda that helped to lead the nation out of recession and back into a period of growth. Both are highly talented and dedicated, and they have served my administration and our nation well," he said.

Lindsey, 48, issued a page-long letter full of praise for Bush and his policies. "But the time has come for me to devote myself to other pursuits," Lindsey said.

According to The New York Times, after triumphing in the midterm elections largely on the strength of his performance as commander in chief, Bush signaled that not even a popular wartime President can ignore or escape the political peril of a weak economy.

In ushering the leaders of his economic team out the door, Bush was making a deliberately dramatic if messily orchestrated statement that he now intends to focus on the issues that are closest to home for most Americans even as he leads the nation toward a showdown with Iraq, the paper said.

"The economic news is mixed and the American public is concerned," said Frank Luntz, a Republican pollster. "This is the administration's way of saying, we hear you and we're doing something about it."

Other economic analysts said O'Neill's departure may not be negative for the U.S. currency, because he was ineffective in many areas.

Steven Salomon, currency strategist at Tempest Asset Management, called O'Neill's departure "a long-term positive" for the economy, adding, "Our economic policy needs to change. We need to strike a balance between a stronger and weaker dollar policy."

"We should recall that O'Neill was a very ineffective Treasury Secretary. He offered no sound analysis of America's economic problems, no understanding of the current situation and no ideas about how to fix them," said Nick Parsons, global head of currency research at Commerzbank.

"There is no implication here for U.S. dollar policy, as the administration does not really have a 'dollar policy,'" said Robert Sinche of Citibank.

"We would strongly disagree with any who suggest that this is a precursor to some change towards a weak-dollar policy."

The dollar was mostly lower, although off its worst levels, as the euro rose to 1.0097 dollars from 1.0004 a day earlier; the greenback was at 123.52 yen from 124.86 late Thursday.

However, other analysts were more cautious about how the move would affect the dollar. "The risk is obviously that the next treasury secretary is yet another step away from the strong dollar policy," said Ian Morris, economist at HSBC.

Japanese officials' current campaign to drive down the yen, and this morning's weaker-than-expected U.S. employment report, leaves the market with a number of cross-currents, analysts said.

Looking forward, "the implication for the dollar depends on who is going to be the next Treasury Secretary," said Jin Saito, vice president at the independent market analysis firm the G7 Group.

Saito noted the tendency for incoming treasury secretaries to make gaffes in talking about the dollar, and riling markets as they learn how to be sensitive to any remarks on foreign exchange matters.

On that point, analysts said there is room for improvement from O'Neill's record, after a number of occasions when he moved markets with off-the-cuff remarks about the dollar.

"O'Neill was perceived as somewhat clumsy and ineffective in his communications with the market," said Alex Beuzelin, senior market analyst at independent analysis firm Ruesch International.

"I don't think anybody in the market will be sad to see him go," Beuzelin said, adding that "at the end of the day, I don't think he will be held in high esteem" by the currency market.

O'Neill first riled markets in a newspaper interview ahead of his first meeting with fellow Group of Seven finance ministers last year, when he said he did not follow a strong dollar policy per se, but saw a strong dollar as the natural by-product of a strong economy.

Later, O'Neill suggested that he would not endorse foreign exchange market intervention to prop up the dollar if it were to weaken.

Analysts say it is preferable for the treasury secretary not to discuss potential action in public, but instead to keep intervention as a tool.