Treasury Undersecretary Anthony Solomon said yesterday the United States was determined to take whatever actions are necessary to keep the dollar stable on foreign exchange markets.
"Our determination is resolute," he said.
Solomon left open the possibility that to encourage dollar stability in he wake of recent declines in dollar prices, the United States and its major partners might resort to measures that would go beyond the dollar-rescue plan of last fall.
He would "neither confirm nor deny" a report circulating in financial markets that to symbolize its willingness to protect the dollar, the United States might double to $60 billion the $30 billion dollar-rescue program put together last Nov. 1.
"We have the resources, can add to them as necessary, and we can take other measures," Solomon said. He refused to specify what "other measures" the United States might be contemplating, but last November the Federal Reserve Board sharply increased the discount rate as part of a dramatic White House program to bolster the dollar.
It is possible that some details of U.S. intentions may be elicited today during testimony before the Senate Finance Committee on the nomination of Federal Reserve Chairman G. William Miller as Treasury secretary. The Senate will get a further chance to solicit details of any U.S. plans Monday when the Senate Banking Committee considers the nomination of Paul Volckr to succeed Miller at the Fed.
The Nov. 1 program was rated a great success, with dollar recovering a third or more its year-long losses of 1978, until the latest round of oil-cartel price increases announced at the end of June.
The less hopeful prospects for reduction of the deficits in the U.S. trade and current account (services and trade) started the dollar on a new slide, with gold moving steadily to new highs.
When markets abroad showed anxiety over President Carter's Cabinet shake-up and the future direction of U.S. economic policy, the dollar moved down farther, losing all of its gains since Nov. 1, while gold - the traditional refuge at a time of worry over paper money - soared over the $300 mark for the first time in history.
Foreign exchange markets dropped the dollar and boosted gold prices at the openings yesterday, when some traders reacted negatively to reports that Carter had said he didn't plan special support measures for the dollar.
But Carter was responding to a narrowly phrased question on whether he is planning to install "any foreign exchange controls or capital controls in order to protect the decline of the dollar." He said he was not contemplating "action of that kind."
He added that the thought the dollar was sound, and that its long run value would be determined by "how effective we are" in dealing with such basic questions as energy, inflation, budget deficits and so on.
Nothing the president said ruled out the amassing of more financial resources for market intervention - if necessary to bolster the dollar - or another boost in the Federal Reserve discount rate.
In Frankfurt, the dollar rose to 1.8220 Germans marks, from 1.8163; in Zurich to 1.6448 Swiss francs, from 1.6404: in Paris to 4.2410 French francs, from 4.2272; in Brussels to 30.17 Belgian francs from 30.14 in Brussels; in Amsterdam to 2.0030 guilders from 1.9970; and in Milan to 816.05 lira, from 815.95.
Solomon, who has been asked to stay on in his key monetary post and who plans to do so, said he is delighted with the appointment of Volcker, now President of the New York Federal Reserve Bank, to the Fed chairmanship.
(Directors of the New York Fed bank set up a search committee yesterday to look for a successor to Volcker.