Dili – East Timor will adopt the US dollar as its official currency under United Nations rule, a senior member of the National Council for Timorese Resistance (CNRT) told Reuters on Monday.

The decision has angered the CNRT, the main political organisation representing the Timorese, which lobbied strongly for the Portuguese escudo.

"We believe the national currency should be an affirmation of independence and sovereignty," said the CNRT source, who declined to be named. "Having the US dollar as legal tender will make our dream of adopting the escudo just a dream."

Mr Luis Valdivieso, the head of the International Monetary Fund office in East Timor, said that if the country started with the dollar, it could stay with it and avoid any potential problems associated with the escudo's absorption into the euro.

"East Timor does not want to have to move from the rupiah to the escudo and subsequently to the euro," he said. "I think the main consideration has been one of pragmatic consideration given the fact that it is urgent now to receive the payments on execution of the budget."

The escudo has great sentimental value for East Timorese who lived under Portuguese rule, but an IMF official said recently that although the escudo was a part of the euro, with all the advantages of stability that that entails, most of the territory's trade is currently done in US dollars.

Indonesia invaded East Timor in 1975, shortly after Lisbon cut loose its colony, but Portugal's opposition to Indonesia's often brutal rule won it the respect of many Timorese.

The currency decision was reached by the 15-member National Consultative Council (NCC), a body established by the UN in December to involve East Timorese in decisions that affect the future of the country.

East Timor is currently being run by the United Nations as an interim authority prior to independence, as promised in the August ballot which overwhelmingly opted to split from Indonesia.