The U.S. dollar recovered on European and Japanese money markets yesterday after President Carter announced short-term measures to improve the U.S. balance of payments and gave personal assurance that Washington will help stablize the world's volatile money markets.
After months of steady decline against the West German mark and Japanese yen, and successive new lows against the Swiss franc, the dollar showed immediate signs of a recovery following Carter's statement. But dealers cautioned that thin trading conditions might have distorted the improvement.
Carter announced a series of short term actions to reduce oil imports and increase agricultural exports and pledged the United States was ready to "intervene to the extent necessary" to counter "disorderly conditions" in the international money markets.
The precise meaning of Carter's statement was unclear. U.S. Treasury officials said it didn't signal any change in American interventionist policy, and the Carter administration was unable to say just what constituted the "disorderly" conditions under which the United States would intervene.
In Zurich, the dollar recovered from Wednesday's record low of 2.0165 Swiss francs to close at 2.0550. It also strenghtened in Frankfurt against the West German mark, closing at 2.1565 marks up from 2.1165.
West Germany, which has been pressing for American measures to strengthen the dollar, welcomed Carter's statement. A government spokesman said Bonn "shares the conviction of the President that the American economy and the dollar is basically sound."
Finance Minister Hans Apel said economic conditions did not justify the weakness of the dollar, and he said he believed the currency's decline could be stopped.
In Zurich, dealers said the dollar rose steadily throughout the day, but banks lengthened the margin between buying and selling rates ahead of the opening of trading in New York.
The dollar also rallied in Tokyo to close at 241.25 yen, up from 240.71. Japan's chief Cabinet secretary, Shintaro Abe, said Carter's statement will contribute to the "stability of the dollar."
In London, the pound was 3 cents cheaper against the dollar, closing at $1.8550 against $1.8845. But dealers said trading was very thin and cautioned that the dollar's weakness will likely persist until investors take a fresh look at the market in the new year.