Presidential aide Robert S. Strauss said yesterday that the decline of the dollar in world foreign exchange markets might delay successful conclusion of multilateral trade talks in Geneva or limit their potential accomplishment.
Strauss, who is the president's special trade representative, told a group of reporters that "we run into this (dollar problem) wherever we go.
"The Swiss say, 'Why should we give you any more trade concessions, we've already given you 23 or 24 percent?'"
Strauss was referring to the dollar's loss of about 20 per cent of its value against the Swiss franc in just the past four months. Not only does that give American goods an advantage against Swiss-made goods, but many Europeans believe that the U.S. deliberately is encouraging a cheaper dollar for that precise purpose. U.S. officials heatedly deny this charge.
The dollar's performance against major currencies was mixed yesterday, but it remained far under its levels of a year ago - levels that American officials now agree are too low.
The most important development was a jump in gold prices in Europe of more than $2 an ounce, which brought gold close to its all-time high of $192.50. Bullion closed at $187 an ounce in London, up $2.20 from Tuesday.
In Tokyo, the dollar closed up fractionally at 235.85 yen, after an all-time low of 235.20 yen in chaotic trading a day earlier. The dollar dipped fractionally against the German mark, Swiss franc, and French franc and was unchanged against the British pound.
A high administration official yesterday reiterated the belief in a Washington Post interview that "the dollar has moved faster and further than the underlying circumstances would justify."
But officials still are placing their bets for the dollar's recovery primarily on the change in sentiment they think will take place once Congress passes on energy bill. This is the main line of dollar defense, rather than an expanded intervention policy as demanded by some Europeans.
Officials also anticipate that - as President Carter stressed the other day - there will be a smaller gap between the U.S. growth rate and that of the rest of the industrialized world this year than last year. That would tend to reduce the hefty American trade deficit which puts pressure on the dollar's value.
In response to questions. Strauss said there is a danger that expectations of what the energy bill might accomplish in reducing oil imports and consumption may be running too high. But he said that passage is crucial as a demonstration of political will.
Meanwhile, Treasury officials did not deny a Wall Street Journal story which said that Secretary W. Micheal Blumenthal and Under Secretary Anthony Solomon have argued in administration circles for administrative action to curb imports through large fees or quotas on imported oil. White House and Department of Energy officials were said to be unenthusiastic about the idea at this time.
But American intervention will continue in an effort to counter "disorderly markets." Officials said yesterday that "there is no problem in mobilizing additional resources (of foreign exchange) for use when we judge the time is correct."
Strauss' concern about the impact of the dollar on trade negotiations reflects a possibility more than a direct threat at the moment.
In general, American negotiations hope to reach a general understanding by mid-summer, on reducing tariffs and non-trade barriers, with legislation ready for Congress by Jan. 1.