The United States, responding to European demands that it act to help stem the rapid decline in the dollar, indicated yesterday it has stepped up modestly its efforts to support the dollar, but does not plan any massive intervention in the currency markets.
In an unusual White House statement, President Carter reiterated previous administration policy that the U.S. would intervene in the markets "to the extent necessary to counter disorderly conditions." And other officials hinted there had been increased intervention recently.
However, high U.S. officials insisted the action did not mark any "change" in the administration's previous hands-off posture on the dollar decline, and indicated the United States was not planning any really major step to prop the dollar up, as Europeans have said they wanted.
Yesterday's action marked a gesture to the Europeans - but not one that seemed likely to satisfy their recent demands. Both the British and the West Germans have called on the United States to take a decidedly more active role to prop up the dollar, following massive outlays on their part over the past few months.
The move constituted a modest shift in Carter administration tactics in relation to the dollar controversey. As recently as Tuesday, high Treasury officials had insisted no policy change was necessary, and that the attack on the dollar was unwarranted.
In an interview after the President's announcement, Arthur F. Burns, chairman of the Federal Reserve Board, labeled the statement "constructive . . . both because . . . of actions the administration intends to take, and also because it clearly recognizes the responsibility of this government to protect the integrity of the dollar."
Burns has been pressing the administration for some time to make some gesture of concern about the dollar's depreciation. Many European traders have complained the United States has acted irresponsibily on the question.
The President's announcement came after another hectic day on the exchange markets, in which the dollar edged upward slightly in listless trading - mostly as a result of the administration's Tuesday morning disclosure of its coming tax-cut program.
U.S. officials had been saying previously that there was no need to intervene to prop up the falling dollar because the dip reflected needed adjustments in the value of the West German mark and Japanese yen, and had not gotten out of hand yet.
Yesterday, however, Carter hinted the United States had now concluded that the dollar had fallen too low in relation to these two key currencies. A high U.S. official said "we are prepared to intervene to the extent neccessary. If the market is more erratic there will be more intervention."
In his message yesterday, the President also cited several new energy measures, apparently intended to demonstrate that the United States is taking some steps toslow its oil imports, despite congressional delay over the administration's energy program. The nation's huge trade deficit is a major factor behind the dollar's recent slide.
The list included expansion of oil production at the Elk Hills, Calif., petroleum reserve and at Prudhoe Bay, Alaska; a speedup in efforts to build new pipelines east of the Rocky Mountains, and expansion of government financing for agricultural and other exports.
However, officials conceded that the steps all were modest, and that some had been announced previously. There were suggestions from some quarters, though, that if domestic oil production is increased enough, it could pave the way for sale of petroleum to Japan.
U.S intervention to prop up the dollar would involve "purchases" of dollars by the Federal Reserve, through swap arrangements already in force with European central banks. Officials say the United States has boosted its intervention visibly since November 1, but that is still is relatively modest.
By contrast, the British and West Germans have pumped massive amounts into the exchange markets recently to slow the slide of the dollar, which makes their own exports less competitive here. U.S. sources estimated the British alone have spent $14 billion or more propping up the dollar.
In a briefing following the President's statement, high U.S. officials predicted the dollar would strengthen in 1978 - apparently a further hint that they believe the recent slide has reached what should be its bottom.
However, they refused repeatedly to say what, if any, level they though was the correct one for the dollar to take, or to define what they meant by "disorderly markets" - the precise situation that would justify more intervention.
The United States has intervened in the currency markets several times so far this year, but always on a modest scale. Yesterday's statement did not.