Federal Reserve Board Chairman G. William Miller indicated yesterday the United States is not planning any symbolic new moves to bolster the doller, despite the continued decline of the American currency on the foreign exchange markets.
Miller told reporters, "I don't believe there will be any reason to rush out and take imprudent steps just to influence the market when the market will be influenced by more fundamental factors." He predicted the dollar would recover soon.
The Fed chairman made his remarks at a press conference called to respond to questions on his nomination by President Carter as the new secretary of the Treasury, replacing ousted Treasury chief W. Michael Bluemental, who was fired last week.
His comments came as the dollar slid Further on the Eropean markets and plunged sharply in Tokyo, continuing a slide exacerbated visibly by Carter's abrupt cabinet reshuffling last week. Meanwhile, gold prices surged to as high as $305.50 an ounce.
At the same time, both Japan and Canada raised their discount rates yesterday following last week's Fed action here boosting interest rates in the U.S. Japan's rate will go up to 5.25 percent today, from 4.25 percent. Canada raised its rate to 11.75 percent, from 11.25 percent.
Miller, as expected, confirmed that his appointment as Treasury secretary would mean no change in Carter's economic policies, and asserted he would have direct access to the president despite last week's elevation as Hamilton Jordan to chief of Staff.
He also urged Carter to choose as his own replacement at the Fed "someone who will be instantly recognized" as a tough inflation-fighter and defender of the dollar to help stabilize the markets. Referring to his own emergence from obscurity, he urged "not (to) have a repeat of my own appointment."
The White House reportedly still has not decided whom the president will name as Fed chairman. Miller is scheduled to undergo a confirmation hearing for the Treasury secretary's post on Friday, and officials hope to announce a new central bank chief by then.
Yesterday, Miller told reporters he agreed to shift to Treasury secretary after only a year as Fed Chairman to "step up to the call" and help Carter out of a jam. "I don't think from my own personal point of view this is an attractive change," he said.
Miller's indication that the Fed planned no new action was intended to help quell speculation against the dollar.The Fed raised interest rates here at home Friday primarily to bolster the dollar on the exchange markets, and has been intervening steadily for the past several days.
The dollar continued to slide in Europe yesterday, declining to 1.8109 marks in Frankfurt, from 1.81.80 at the close of trading Friday. In Tokyo, the dollar plummeted to 214.75 yen, from 216.50 at the opening of trading, largely because of the discount rate change.
In discussing his pending administration post, Miller said he expected to replace Blumenthal fully as the president's chief economic spokesman. "I understand the secretary by office is chief economic spokesman," he said. "I expect to have good relations with the (White House) staff."