Treasury Secretary W. Michael Blumenthal yesterday revealed he had received assurances from a high Saudi Arabian official that his government would not try to diversify its dollar holdings into other currencies.
Blumenthal told a press conference he had met privately over last weekend in Paris with Saudi Minister of Finance Sheikh Muhammad al-Ali Abalkhail as part of a process of "maintaining contact" with the leading oil cartel producer.
The Treasury official was in Paris for a regular meeting of the "Big Five" finance ministers of the U.S., West Germany Great Britain, Japan, and France. He then held bilateral talks in Bonn with West German Chancellor Helmut Schmidt.
Blumenthal indicated that the consensus at the Paris meeting was that there would be a "convergence" of national economic growth rates this year, easing the problems brought on by last year's disparity in growth rates. The higher growth rate in the U.S. attracted imports here last year and discouraged exports, thus adding to the troublesome trade deficit, according to U.S. officialsw.
Blumenthal would not respond directly to a question about the U.S. position on an economic summit in Bonn, to which Chancellor Schmidt has invited the U.S. and five other major nations.
By referring to "a summit," rather than the Bonn summit, which might be useful "under the right circumstances," Blumenthal appeared to some to be withholding American approval of Schmidt's initiative as further pressure on the Bonn Government.
But White House Associate press Secretary Jerrold Schecter said in response to a Washington Post query that "we've agreed in principle to a summit in Bonn in July, and we've agreed with Chancellor Schmidt that the date will be set in April after a preparatory meeting." President Carter and Schmidt agreed on the summit session in an exchange of letters two weeks ago, it was learned.
Blumenthal appeared anxious to soothe foreign exchange markets, which turned unsteady after the Bonn meeting in the wake of reports of continued tension between the U.S. and West Germany over the projected 1978 German growth rate of 3.5 percent.
He said he was "encouraged" by Schmidt's optimism that his country could achieve that rate of growth this year, because it would make "a contribution" to overall recovery in the industrial world.
Blumenthal added that both West Germany and the U.S. "had agreed on continued collaboration for the future" in efforts "to assure orderly markets for the deutsche mark and the dollar." Since the end of last year, the U.S. has joined the European effort to intervene in foreign exchange markets to slow the erratic changes in the dollar rate. He said the nations involved have committed "the necessary resources" to maintain order in the exchange markets.
Blumenthal went to some lengths to defuse reports of American disagreement with Germany's internal economic policies, denying that he had "scaled down" earlier American demands.
"I did not go to Bonn to urge the German government to do more," he said. He noted that a 3.5 percent growth rate, if achieved, would bring the German rate of growth toward the end of the year into the 4.5 to 5.0 percent range.
Blumenthal's meeting with the Saudia finance minister - who was accompanied by the head of the Saudi Central Bank - came against the background of rumors that members of the Organization of Petroleum Exporting Countries were turning away from the dollar. According to some reports, the OPEC nations were disturbed enough by the drop in the dollar value to be considering denominating oil sales in some other currencies.
"These are inaccurate reports," Blumenthal said. He asserted, that the Saudis fully understand the strength of the U.S. economy, and have no such intentions. He said that in Paris meeting with the Saudi's, there were no discussions of future OPEC prices, but he observed that their government decision not to boost prices for 1978 was "a valuable contribution to international stability."