President Reagan said yesterday that the rest of the world's currencies would gain against the dollar as other countries "improve their economies," and therefore the review of the international monetary system that some people have suggested is not a top priority.
Meanwhile, the Treasury reported to Congress that returning to managed currency exchange rates could impair the ability of the United States and other major nations to pursue strong economic growth with low inflation. "There are no practical alternatives to the flexible exchange-rate system which should be adopted at this time," the report said.
At a White House breakfast with a group of Washington reporters, Reagan was asked whether some new study of the strong dollar might be undertaken in response to fears here and abroad that eventually it might fall sharply, injuring the U.S. and global economies.
Reagan acknowledged that some reduction in the dollar's strength against other currencies "could be beneficial to all of us, because our country has the ability to export economic trouble as well as economic recovery." Other countries complain that an overvalued dollar forces them to keep interest rates too high, discouraging efforts to expand their economies and reduce unemployment.
But the president suggested that greater stability will be achieved without a new international effort at monetary reform, primarily because economic activity in other major nations is reviving, which will strengthen their own currency values.
"This has come up before in international meetings," Reagan said. "There are others that look back at Bretton Woods and . . . wonder should we take another look and see that there have been distortions or whether something better can be worked out. We're always willing to listen and look at this, and I agree that, if there was a sudden -- you might say, collapse -- of the dollar . . . I think it could be very harmful in leading the world to believe that we are all in greater economic trouble than we are."
The president's comments, together with the Treasury report to Congress, were taken as a response to various plans circulating in Europe calling for greater currency stability.
The Treasury report said that sharp swings in currency relationships can be attributed to "the turbulent world economic and political environment" during the past decade, rather than to the floating-rate system.
Just last week, European Community External Affairs Commissioner Willy de Clerq told a Washington press conference that ways must be found to encourage greater stability of exchange rates. He suggested that the world's leaders might examine broadening the European Monetary System -- which limits the permissible fluctuations among Europe's paper monies -- to the dollar and other currencies.
De Clerq cited with approval a comment made two weeks ago by Treasury Secretary James A. Baker III indicating a willingness to take "a new look" at possible international monetary reforms. "I find that encouraging," de Clerq said.
Although Baker's comment was cited in the question put to Reagan, he stuck to previously articulated views that the huge gap between the value of the dollar and those of other currencies reflected the difference in the progress of the economies involved. He said that the American recovery "has begun to stimulate improvements among our trading partners."
The question of international monetary reform has persisted since the collapse of the Bretton Woods fixed-rate system a dozen years ago. As currency volatility has increased, many Europeans have called for a "Bretton Woods II" or other international conference to try to evolve a system to bring major currencies closer together.
Former Treasury secretary Donald T. Regan, now White House chief of staff, at one point indicated some interest in such a conference. A new Bretton Woods conference also has been backed heavily by French President Francois Mitterrand, who pressed the issue at the economic summits in Versailles in 1982 and in Williamsburg in 1983.
A study group on international monetary reform, under the finance ministers of the 10 largest nations, evolved out of those two summits. That committee is preparing a report that is likely to be discussed at the economic summit in Bonn in May, although it is not scheduled to be completed until mid-1985, according to the Treasury report issued yesterday. It is expected to call for better coordination of economic policy and stricter surveillance by the International Monetary Fund.
But such generalized suggestions have been made before; anything more specific to alter the present exchange-rate system, in which rates are allowed to change according to the dictates of the market, has been resisted by the Reagan administration for the past four years.
The Treasury report, required as part of the congressional legislation of 1983 enlarging United States participation in the IMF, indicates that the Reagan policy hasn't shifted.
"The current exchange-rate system has, in fact, made a positive contribution to the adjustment process and to the maintenance of international trade and investment," the report said.
The report also said that the IMF has adequate resources for the foreseeable future, and that the current case-by-case management of the Third World debt problem is working well. It also said that, although there is no evidence of Japanese manipulation of the yen, "a variety of restrictions and controls" have kept the yen from fully reflecting the strength of the Japanese economy.