The Reagan administration yesterday criticized West Germany for not doing more to strengthen the mark against the dollar after agreeing in September to help push the U.S. currency lower.
Assistant Treasury Secretary David C. Mulford yesterday told a House Banking subcommittee that the administration is "not satisfied with the German response" to an agreement by the United States and four major trading partners to push down the value of the dollar. It was the first administration criticism of how that agreement was being carried out.
Germany has been the "least responsive" of the nations, although there has been "some adjustment" in the value of the mark against the dollar, Mulford said. That adjustment has not been as much as that of currencies of the other nations in the agreement: Britain, France and Japan.
A spokesman for the West German Embassy said his government had no comment on Mulford's remarks.
Since the agreement, the dollar has fallen about 15 percent against the yen, but only 8 percent against the mark, economists said. Some of the other governments have complained that the bulk of the responsibility of lowering the dollar has been taken by Japan and that Germany has done little.
The initiative in September was taken as a way to improve the United States' exports and reduce its trade deficit, which is expected to reach a record $150 billion this year. It was also an attempt to reduce pressures in Congress for legislation to curb imports.
Most of the trade criticism was aimed at Japan, which is expected to post a record $50 billion trade surplus with the United States this year. Germany has a trade surplus with the United States second only to Japan among the four big trading nations, but has been able to escape much criticism because of the focus on Japan, economists said.
Germany has been accused of purposely undervaluing its currency to increase exports as a way to reduce its 9 percent unemployment rate, which is high by recent standards but is the lowest of the major European countries, economists said.
Former West German chancellor Helmut Schmidt and some members of the sitting government have criticized their country's current economic policy, which has concentrated on controlling borrowing and keeping inflation in check rather than on promoting fast growth. Schmidt and officials of other governments have asked Germany to pump up its economy to increase its purchase of imports.
The German government contends that its stringent policies will reduce the country's interest rates even further, which will encourage investment and eventually increase growth. However, low interest rates also make the mark less attractive to foreign investors, which will restrain its value.
Mulford said yesterday that the Reagan administration thinks Germany can do more to stimulate its growth "without pump-priming" and adding to inflation.
In other remarks, Mulford reiterated the administration position that intervention in foreign exchange markets can have only a limited effect on exchange rates and cannot substitute for "basic economic policies for influencing long-term exchange market trends."
Mulford also said that it is premature to determine whether an international monetary conference is necessary. However, if one is needed, the government is prepared to host one, Mulford said.