WASHINGTON -- The Clinton administration intensified its public campaign yesterday to talk up the value of the dollar, declaring that a higher dollar had crucial benefits for the U.S. economy and that another slide in the American currency would slow global growth.
The president's top economic adviser, Laura D'Andrea Tyson, also said that the White House would not object to another quarter-point increase in short-term interest rates before the end of this year, a move that could bolster the declining currency.
The remarks by Ms. Tyson and Lawrence H. Summers, the Treasury undersecretary for international affairs, came a day after Federal Reserve Chairman Alan Greenspan hinted strongly that another interest rate increase was likely and gave a strong boost to the dollar.
The dollar rose sharply yesterday against the German mark and inched higher against the Japanese yen. In late New York trading, the dollar was quoted at 1.5925 marks, up 1.8 percent from 1.5650 marks on Wednesday, and at 99.20 yen, up from 98.65 yen.
Currency traders said that the administration's repeated message -- that it does not want to see a weaker dollar in order to club Japan over the head on trade, and that the fundamentals of the U.S. economy do not justify further dollar selling -- may finally be getting through to the markets.
"We believe a renewed decline of the dollar would be counterproductive to global recovery," Mr. Summers told the Senate Banking Committee.
In contrast, he added, "a strengthening of the dollar against the yen and mark would . . . restore the confidence in financial markets that is important to sustaining recovery."
Mr. Greenspan told the committee Wednesday that a weak dollar could fuel inflation in the United States. He signaled that another quarter- to half-point increase in interest rates was likely in order to dampen inflationary pressures and indirectly support the U.S. currency, by making it more attractive to investors to keep dollars in U.S. banks.