Despite the dollar's continued steep slide against the Japanese yen, the U.S. has no plans to start intervening in currency markets to support the dollar against the Japanese currency, Assistant Treasury Secretary C. Fred Bergsten said yesterday.
The U.S. has intervened periodically but actively on behalf of the dollar against the West German mark. Bergsten said "a largely technical consideration" dictated this strategy, explaining that the government has decided "the most effective way to cope with market instability is to do it with the mark market."
Since the beginning of the year, the Bank of Japan's intervention to support the dollar is estimated to total about $6 billion, with about $1 billion alone spent to buy the U.S. currency in Tokyo on Tuesday. At the same time, the U.S. has remained on the sidelines with respect to the dollar-yen relationship.
[Meanwhile, yesterday, the Japanese central bank said it has stopped buying dollars to support the U.S. currency.]
There have been reports that the Carter administration is dissatified with the level of progress Japan is making in whittling down its export surplus, and has kept up the pressure by not intervening. As the yen appreciates in value, Japan's exports become more expensive.
Bergsten, who held a news conference before making a speech here to the Japan Society, said there ws "movement in the right direction" by Japan on exports, nothing the Japan's volume of exports was basically flat for the second part of 1977 though there has been some resurgence in recent months.
He said steps to increase U.S. exports to Japan will take some time to take hold, and he expressed confidence that, "As the year goes on, we will begin to turn the situation in the right direction."
Bergsten declined to say whether he believes the yen is valued appropriately with respect to the dollar. He noted that U.S. intervention policy is aimed at smoothing disorderly currency markets rather than pegging the dollar to specific values of other currencies.
In his speech to the Japan Society on economic relations between the U.S. and Japan, he stressed the need to address underlying structural problems in both countries. The U.S. needs to import less oil and become more export-oriented, he said, and Japan no longer can rely on export-led growth and needs to integrate imports - particularly manufactured goods - more fully into its economic life.