Joint bid fails to hold $US

Press, 15 March 1978, Page 8

Joint bid fails to hold $US

NZPA-Reuter Washington

Joint moves by the United States and West Germany to shore up the United States dollar have failed to stop the slide of the United States currency on Far Eastern foreign exchanges. It fell to a new exchange low of 23320 Japanese yen shortly after trading opened yesterday in Tokyo, although it later recovered slightly to 233.80.

The fall came after the] dollar’s drop against West! Germany’s currency, the; mark, on the New York exchange on Monday when it closed at 2.047 after opening at 2.061 marks. The dollar also dropped on European exchangesIn the United States-W’est German deal announced on Monday, the two countries patched up their economic differences.

A series of measures designed to bolster the United States dollar and commit West Germany to economic expansion gave the United States a big new pool of foreign currencies to defend its dollar against speculation.

But foreign exchange dealers said the measures were insufficient to help the long-term recovery of the United States dollar. International monetary experts in Washington said

they believed that time would show that the ‘ measures were right. They said that once the signifi-, cance of the agreement was] realised, the dollar would re- ] gain lost ground. . | West Germany had previ-; ously appeared unwilling to take' anv significant action, until the United States showed it was serious in its , efforts to maintain the ■ dollar’s integrity. For its part, the Carter Administration seemed unIwilling to do too much about 4he del’ r until Bonn coraImitted itself on growth. ! The new moves, announced ! after a week-end of Atlantic Telephone conversations between senior officials of the 'Carter Administration with an additional SUS77SOM with which to counter speculation against the dollar on the world’s currency markets.

By agreeing in turn to assess its economic performance and. presumably, to take any measures necessary to stimulate output, West Germany would give the world’s economy a boost and allow some further reflationary measures by other industrial countries. This would also aid the United States economy by helping to reduce its huge balance-of-trade and payments deficits, thus removing one of the main causes of the dollar’s weakness.