The decree, which becomes effective on Monday, also cut the price of one litre (0.26 gallon) of high octane petrol by 25 percent to 0.75 riyals (20 cents) and that of diesel fuel by almost 35 percent to 0.25 riyals (6 cents) per litre.

The move came as Western consumers of the world's leading oil producer and exporter were facing sharply increased prices at the pumps amid record high crude prices.

US President George W. Bush ordered on Tuesday a federal investigation into what has caused fuel prices to rise at least 25 percent in the United States over the past month.

US Energy Secretary Samuel Bodman warned in an interview with NBC television on Sunday that high fuel prices for consumers were here to stay for the next couple of years citing huge demand from the fast growing economies of China and India.

Saudi Arabia has been investing heavily to increase its production capacity launching a processing plant in March that raised its daily production by 300,000 barrels to 11.3 million barrels. Its goal is to raise its capacity to 12.5 million barrels per day by 2009.

The United States, the world's largest oil consumer, is Saudi Arabia's number one customer and a long-time strategic ally despite the strain to the relationship that followed the September 11, 2001 attacks on New York and Washington, carried out mostly by Saudi nationals.

But Riyadh, which joined the World Trade Organisation last December, has been increasingly looking east, particularly to China.

The kingdom is studying a proposal to set up a Saudi-fed strategic oil reserve in China and is investing billions of dollars along with Chinese partners to build refineries in the country.

"We all say people will sell their house and that's how they are going to live," says Bev Moore of MainStay Investments, a division of New York Life Investment Management. "But the bubble might be in the process of bursting."

Only 11 percent of older people who are already retired actually expect to live off of their home's value, she says.

"Baby boomers have to stop going to Home Depot and start doing more planning and saving," Moore said.

Home value is not worth nothing, of course. And some advisers unscrupulously push clients into selling real estate and buying stocks, bonds and mutual funds just because they are more profitable for the adviser.

There are good reasons, however, not to pin too much of your future on the value of your house. And, it's hard to know exactly how much your house can and will contribute to your comfortable retirement.

Here are some points for homeowners to consider.

-- What if housing goes bust? Most homeowners will be able to sell their homes for more than they owe on them, but not everybody is safe.

Those at the biggest risk are the ones who stretched loans to the max to buy inflated homes, those who are using home-equity lines of credit for non-housing expenses, and those paying off equity slowly, or not at all, with interest-only mortgages.

Also at risk are folks who own homes in single-industry towns. When a plant closes or oil prices collapse (hey, it happened in the '80s), lots of people leave town at once and they may not be able to sell for enough money to pay off their mortgages.

If you recognize yourself as being vulnerable to a home price rout, be aggressive about paying down your loans and building equity in your home.

-- Are you diversified? If all of your hopes and funds are in your home, the answer is certainly no. Make sure you feed a 401(k) or IRA or other investment account, and put money into some assets -- like stocks -- that don't correlate much with real estate.

-- Are you sure you will want to move? It's becoming common for retirees who head for Florida or Arizona to "bounce back" home, reports Bob Carlson, a Richmond, Virginia, financial planner and editor of Retirement Watch newsletter (http://www.retirementwatch.com).

Many boomers say they want to stay in big homes so their kids can come visit, says Moore. Others say they'll downsize, but imagine "downsizing" to luxury townhouse communities with granite countertops and high-end recreational facilities. They won't save much money with moves like that!

-- Will you be able to afford to stay in your home? Increases in property taxes and heating costs could make even a paid-off home unaffordable in the long haul. If you want to retire in place, you might have to save even more money in retirement accounts than you would if you were willing to move.

But remember that every plan doesn't have to be put in place on the first day of retirement. You can retire in place for 10 years or so, and then sell your home in your 70s for a second phase of retirement life.

-- Will your mortgage be paid off? It was smart to lock in the low, low mortgage rates of recent years, but it's still an iffy proposition to move into retirement with mortgage payments.

Here's why: You may have to withdraw money from a 401(k) or IRA to make mortgage payments, and that counts as taxable income. That, in turn, can push your income up to levels that will make higher amounts of your Social Security benefits taxable. And that can make those mortgage payments pricey.

On the other hand, if you can invest money that earns 9 percent a year while you slowly pay off a 5 percent mortgage, that can make more sense than prepaying the loan. The only way to figure out what's best for you? Do the math, or find a good adviser or CPA who can do it for you.

-- Have you thought creatively? There are ways to use your home equity without moving, if you want to retire in place. You can take in boarders, sell your home to your kids, take out a reverse mortgage, or use it to run a part time home-based business.

Owning a house should not be your only ticket to retirement, but it will buy you some flexibility, some financial freedom and those comforts of home.

JAPANESE YEN: The yen jumped to a three-month high in the past week after G7 finance chiefs urged China to make its currency more flexible to help redress global economic imbalances, dealers said.

The Japanese currency stood at 114.25 to the dollar late Friday, up from 117.61 to the dollar a week earlier.

Yen-buying sentiment emerged during the week after finance chiefs from the Group of Seven industrialised nations ramped up the pressure on China to relax its grip on its currency.

The statement was taken as a call for Asian countries, and especially China, to allow their currencies to appreciate faster and further against the dollar as part of a strategy to tackle global imbalances, most notably the massive US trade and current account deficits.

"It's a very specific statement calling for China to do more on the currency front and the market read it as a signal for the US dollar to move lower," said Thio Chin Loo, a currency strategist with BNP Paribas in Singapore.

The yen extended its strength toward the end of the week as the dollar fell sharply after US Federal Reserve Chairman Ben Bernanke hinted the US central bank was close to a pause in its string of interest rate hikes.

The greenback was further pressured by news that China's central bank was raising interest rates for the first time since 2004 although dealers said the actual effect of the decision was likely to be muted.

AUSTRALIAN DOLLAR: The Australian dollar was expected to rise further in the coming week after trading at a three-month high Friday amid weakness in the US dollar and expectation of a local interest rate hike, dealers said.

The currency was trading at 75.47 US cents at 5:00 pm (0600 GMT) Friday, well above the previous week's 73.81 US cents. The currency hit a high of 75.70 US cents during Friday, its highest point since January 31.

Dealers said the Aussie was supported by the expectation of a rise in local interest rates.

The Reserve Bank of Australia meets this week to discuss monetary policy and while a hike in interest rates is considered unlikely this month, the expectation of a future rate increase is already being built in, they said.

"Factors favour the Aussie for the week ahead," CMC Markets' Josh Whiting said.

"Unless we see a dramatic pullback in commodity prices... we will continue to see buyers favouring the Aussie."

However, Whiting said the Aussie was likely to see "fairly strong resistance around the 76 US cent mark."

"It hasn't been above the 76 US cent mark for about six months now," he said.

NEW ZEALAND DOLLAR: The New Zealand dollar ended the week at 63.36 US cents, up from 62.79 the previous Friday.

The kiwi benefited from weakness in the US dollar at the start of the week but lost a cent on Tuesday in illiquid trading during a New Zealand holiday. It gained again late in the week as the US dollar again weakened against major currencies.

CHINESE YUAN: The Chinese yuan closed stronger Friday at 8.0140 to the dollar, after a surprise lending rate hike announced by the central bank the day before. This compared with a closing price of 8.0170 on April 22.

The People's Bank of China raised its key one-year benchmark loan rate by 27 basis points to 5.85 percent, and lending rates for loans on other terms were also increased in the bank's first rate hike since October 2004.

Friday's central parity rate was set at 8.0165 to the dollar. The central bank has a yuan-dollar trading band of 0.3 percent on either side of the midpoint.

HONG KONG DOLLAR: The US-dollar pegged Hong Kong dollar closed the week at 7.7548 from the previous week's close of 7.7542.

INDONESIAN RUPIAH: The rupiah ended the week slightly weaker at 8,800-8,810, compared to the previous week's close of 8,875-8,885.

PHILIPPINE PESO: The Philippine peso fell to 51.785 to the dollar on Friday afternoon, compared to 51.69 on April 21.

SINGAPORE DOLLAR: The dollar was at 1.5824 Singapore dollars on Friday from 1.5983 the previous week.

SOUTH KOREAN WON: The won closed at 943.40 won per dollar Friday, down 1.5 won from the previous day and down 5.2 won from 948.60 won a week earlier, reflecting the global depreciation of the US currency.

Finance Economy Minister Han Duck-Soo said the government would stage a hectic battle against speculative investors to secure the stability of the won.

The won has risen more than six percent against the greenback this year alone.

TAIWAN DOLLAR: The Taiwan dollar rose 1.23 percent in the week to April 28 to close at 31.913 against the US dollar. The local currency closed at 32.309 a week earlier.

THAI BAHT: The Thai baht continued to appreciate against the dollar in the past week, in line with rallies by the Japanese yen, even though the Thai central bank governor conceded that the bank has intervened to soften the baht in past four months, dealer said.

The Thai baht closed Friday at a six-year high of 37.49-51 baht to one dollar, compared to last week's close of 37.77-80.

Against the euro Thai unit closed at 47.11-17 baht to one euro compared to previous week's close of 46.60-66.

"The oil has gone up because the suppliers are unable to make the flows equal to the demand," he said. "... Clearly, it's going to be a number of years, maybe two to three years, before suppliers are going to be able to keep up with those demands."

Bodman blamed demand from China and India, reduced refining capacity after Hurricane Katrina, and inadequate planning for shifts to cleaner fuels like ethanol and low-sulfur diesel for causing market "dislocations" that led to rising prices, but Red Cavaney, president of the American Petroleum Institute, the industry trade group, said the war in Iraq played a major role, too.

U.S. companies have been unable to provide the Iraqis with technical assistance to revive their oil industry because "we make sure that we don't put our employees in harm's way," he said. "As soon as you can stabilize the situation in Iraq, they can ramp up production, but it's going to take years."

Industry profits defended

Senate Minority Whip Dick Durbin of Illinois said the price of gasoline had almost doubled since Bush took office. "All of these things were predictable," he said, pointing to provisions of the energy bill Bush signed last year, which did not shield producers of cleaner-fuel additives like MTBE from legal liability, thereby slowing the transition and squeezing gas supplies.

"We've had a failure in our nation's energy policy," Durbin said.

At the same time, U.S. oil companies are reporting record profits even as motorists struggle to deal with the rising prices. Chevron Corp., ConocoPhillips Ltd. and ExxonMobil Corp. combined to earn more than $15.5 billion in the first three months of the year. But Bodman and Cavaney said they saw no problem with the profit reports.

Bodman said the U.S. companies faced competition primarily from from government-owned and -controlled firms, which can manipulate market forces to their advantage. "A lot of it is controlled by what [Venezuelan President] Hugo Chavez does, for instance," he said.

U.S. refiners need large cash reserves to compete in research and development, he said, and to drive more exploration and drilling.

Bush said last week that there was no evidence of price gouging, but he called on the Justice Department to open an investigation. Bodman said he, too, saw "we see no evidence of it, but this is one of those situations where I guess I would call it 'trust but verify.'"

Bush last week announced several measures to lower prices, including a suspension of filling the nation's emergency oil stockpile and relaxing environmental regulations.

"This administration is doing everything it can do," Bodman said.

Taxes on oil companies?

The secretary was clear in his opposition to imposition of a "windfall profits" tax on the oil industry, which many Democrats and some prominent Republicans have supported.

Sen. Arlen Specter, R-Pa., chairman of the Judiciary Committee, said last week that a windfall profits tax could offer eventual relief to consumers, while Senate Republican leader Bill Frist of Tennessee said on MSNBC's "Hardball" that the Republicans would try at least to repeal some tax credits to oil companies.

Durbin, the No. 2 Democrat in the Senate, echoed those calls on "Meet the Press," warning that "if you do not tax these corporations ... they will continue to run up the profits to high heavens."

But Bodman said such presumably "punitive" tax measures would be counterproductive. "That was tried 30 years ago. It did not work," he said. "That proposal does not hold water."

An NBC News-Wall Street Journal poll found this week that rising gasoline prices were Americans' biggest concern this week, more than the nuclear threat from Iran and illegal immigration. Economists, however, say the impact on the economy will be muted because energy costs were a relatively small part of the $11 trillion U.S. economy.

Ben Bernanke, chairman of the Federal Reserve, predicted last week that the rising cost of energy would probably likely slow economic growth by only "a couple of tenths" of a percent over the next two years by cutting into consumer spending.

Some are responding with perks to attract job applicants as "Help Wanted" ads go unanswered. Others are subcontracting work to inland cities, chasing the young, single workers that once came knocking on their factory gates but are now in shorter supply.

"There's a fixation that China has an abundant, unlimited supply of labor ... so people initially said this was a temporary phenomenon. But now [they] realize it's a general trend," says Hong Liang, an economist at Goldman Sachs in Hong Kong, who studies China's labor market. "In the central provinces, we're seeing more manufacturers moving there to absorb the local labor."

Those workers that remain in coastal cities like Dongguan, whose sprawl of tile-roof factories belch into a jaundiced sky, are demanding higher wages - and getting their voices heard. Minimum wages are on the rise, as authorities respond to the labor shortage, setting a new floor for private employers. This pressure on factory payrolls, coupled with rising cost of materials and energy, is starting to bite. Retail buyers warn that textile factories in Bangladesh and India are undercutting China and blame double-digit wage hikes here for inflating costs.

None of this means that China's export engine is running out of gas. Even as some factories struggle to stay competitive, other industries are ramping up production. If anything, the economy could be in danger of overheating at its current clip, which officials say is more than 10 percent - a risk that prompted China's central bank to raise interest rates last week for the first time in 18 months.

Why 1.7 million workers went home

But while China's labor shortage may not have dampened the economy, it has factories here in the Pearl River Delta - its export powerhouse - scrambling to adjust.

Around 1.7 million migrant workers in the region who took annual leave in January during the Chinese New Year holiday didn't return afterward, preferring to look for jobs closer to home or in other coastal cities says Liu Kaiming, who runs a labor-rights group in Shenzhen.

In an effort to retain workers at her small shoe factory, Maria Ma raised salaries last year by 10 percent and added more vacation time, but she still worries about losing out to rivals elsewhere in China offering better wages.

She's not alone. A survey of members by the Asia Footwear Association in Hong Kong found earlier this year that many Chinese shoemakers were understaffed, some by as much as 60 percent. Newly built plants in Dongguan are idle for lack of workers, says Percy Lan, an entrepreneur who publishes a footwear industry magazine. He says the industry employs around 1 million laborers in Dongguan, but needs 100,000 more.

While workers once flocked to cities like Dongguan, rising rural incomes and rapid growth in inland cities have diminished the appeal of migration to coastal boomtowns - particularly among young, single women, whom factory bosses prefer to men as easier to manage. Staying close to home means access to healthcare and other benefits that migrants don't always receive. So job seekers are playing harder to get.

"Girls are asking, 'Do we get overtime? What are the benefits?'" says Kathy Deng, who owns a recruitment company in Guangzhou. "Guangdong needs workers. Zhejiang and Shanghai need workers. They have more choices. So it's difficult to find workers."

Growing affluence in Pearl River cities also means new job alternatives. Away from Dongguan's grimy factory belt, SUVs stream along highways to upscale neighborhoods that are hungry for manpower. "No matter how much you pay [in factories where wages average $100 per month], the service industry pays more. People want to work in stores, or be waiters in five-star hotels," says Mr.Lan, the shoe industry publisher. Some footwear plants are responding by upgrading worker dormitories, cafeterias, and bathrooms.

But the improvements aren't enough to keep migrant worker Xiong Kejing around. He's spent the last nine years working factory and construction jobs, trying to save money, and is ready to head home with his wife and baby daughter to Chongqing, a 36-hour journey by bus.

He's heard stories of higher wages in Shanghai, but is skeptical about another stint as a migrant, either in Dongguan or another coastal city. "You can't stay out here forever. There's probably more opportunities back home now; we can open our own business," he says.

It's not only factories that are feeling pinched by the departure of migrants like Xiong.Affluent cities in the Pearl River Delta have come to rely on migrant workers to wash dishes, cut hair, and take care of the young and elderly.

Wages for nannies triple

Down a narrow side street in Guangzhou, the provincial capital, dozens of women sit inside a yellow-walled job agency for domestic servants swapping stories and waiting for offers. Liu Bin, who runs the place, says the tight labor market is forcing employers to pay more and be less picky about whom they hire.

As she finishes speaking, a trio of middle-aged women enquire about finding a replacement nurse for their octogenarian parents. Braced for a pay raise, they're ready to pay nearly double the monthly 450 yuan ($55) a caregiver cost three years ago. "It's really hard to hire someone from Guangzhou," sighs Cai Rongqiu, one of the three women. "They don't want to be nurses; they want a job with good pay, fixed hours, and an easy life."