Central banks give support to dollar


WASHINGTON -- Amid signs of increasing discord with its allies over the sharp fall of the dollar, the United States was joined yesterday by Germany and Japan in largely symbolic moves to bolster the U.S. currency. But once again, the Clinton administration failed to reverse the dollar's decline.

Treasury Secretary Robert E. Rubin later took the unusual step of calling a small group of reporters in Washington to announce ** that the three countries had been acting in concert and to argue that "in effect what you have is a shared commitment to a strong dollar because it is in our interest and in the interests of the other economies of the world."

But the verbal commitment was considerably stronger than the financial one. Currency traders said that the repeated interventions yesterday -- the second time in three days that central banks bought dollars in the market -- were relatively small in scale, and the dollar immediately retreated when the buying was over.

The net result was unimpressive: The dollar ended down slightly against the Japanese yen, at 86.04 from 86.21 Tuesday. Measured against the German mark, the dollar was quoted in New York at 1.3725 marks, down from 1.3785 on Tuesday.

Choosing his words carefully, Mr. Rubin said that Washington's primary objective in trying to reverse the dollar's slide was to prevent the rising cost of imported goods -- from German machine tools to Japanese cars -- from causing higher inflation in the United States.

At the same time, he insisted that the White House was not concerned that the weakness of the dollar would translate into a loss of political

influence for the United States, especially if other countries begin to conduct business around the world in other currencies.

Mr. Rubin also sought to put to rest a common belief among Wall Street traders that the United States did not mind a weak dollar because it helped put pressure on Japan to open its markets wider. "We have not and will not use the dollar as an instrument of trade policy," he said.

Mr. Rubin made the case that Germany and Japan were equally worried about the dollar's plight because their own goods were becoming more expensive and thus less competitive. A weaker dollar makes U.S. goods less costly for importers in nations whose currencies have gained in value.

But his insistence that the larger group of allies known as the Group of Seven shared the goals of the United States came in sharp contrast to statements yesterday by several German officials, who made it clear that they saw the dollar as Washington's problem, not theirs.

And the Germans argued that only Washington could overcome the dollar's weakness, chiefly by bringing the nation's budget and trade deficits under control.

"Stability begins at home," said Finance Minister Theo Waigel, Mr. Rubin's counterpart in Germany. In a particularly blunt assessment during a speech to a conference of German bankers in Bonn, Mr. Waigel said that "G-7 cooperation cannot be used to compensate for national deficiencies."

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