Treasury Secretary James A. Baker III yesterday reiterated that he was "satisfied" with the 30 percent decline of the dollar in the past year, but failed to repeat earlier suggestions that additional declines would be welcome.
"We have no target for the dollar. . . . There might well be a point beyond which we would not want to see the dollar go down further. But it serves no useful purpose for me to speculate about that or hypothesize about it," Baker said in an interview on the "Today" show on NBC.
"All that does is tip off the speculators, if you will, as to what our intentions might be, and that's really not something we want to do," he said.
But administration officials, while acknowledging they have temporarily abandoned the practice of "talking the dollar down," cautioned against concluding that Baker had signaled a change in American policy, in which there would be no pressure for a further decline in the dollar.
"What you can conclude," a senior official told The Washington Post, "is that it is no longer necessary for us to talk the dollar down, because we have now got the cut in the Federal Reserve discount rate that we wanted. But that doesn't mean that we are satisfied or dissatisfied with the current level of the dollar.
"The main thing we want to do is to keep the market guessing. You may wake up tomorrow morning and find that we are talking the dollar down again."
The senior official added that the main reason for jawboning on the dollar exchange rate "frankly was to encourage our German friends" to lead the way to a coordinated decrease in interest rates that was accomplished March 6 and 7 with actions by the Federal Reserve Board here, and the central banks of Germany and Japan.
Meanwhile, in Japan, where the mirror image of a weaker dollar is a stronger yen that has caused great concern among Japanese exporters who have been forced to raise their prices, the government continued to intervene to keep the yen from appreciating further.
Baker's comment on the "Today" show came in advance of a series of international financial meetings here next week at which the rapid drop in the dollar -- especially since September -- and the plunge in oil prices will be major topics of discussion. He also will meet Tuesday morning with Japanese Finance Minister Noburo Takeshita to discuss bilateral issues, including the sharp drop of the dollar against the Japanese yen.
Takeshita is coming here for a session with finance ministers and central bankers of the Group of Five nations -- the United States, Japan, Great Britain, France and West Germany -- one of the highlights of a month-long series of international financial meetings that will culminate in the Tokyo Economic Summit May 4 to 6.
Asked why he had said in the past that he wants the dollar to decline further, whereas Federal Reserve Board Chairman Paul A. Volcker and others had expressed concern about the degree of the drop since a meeting of the G-5 in New York on Sept. 22, Baker responded:
"I happen to believe that the decline of the dollar since then has been accomplished in a moderate and orderly way, and we're very pleased with it." The decline of the dollar has been cheered by American manufacturers, who anticipate that it will increase exports, reducing the huge U.S. trade deficit.
Baker's mention of a possible point where the United States would not want to see a further decline in the dollar came in answer to a question about whether there is "any bottom" to the process.
The negative aspects of a sharp dollar decline are that it could discourage foreign investment that helps finance the budget deficit and that it adds to inflationary pressures by causing a rise in the price of imported goods.
In connection with next week's semiannual meetings of the International Monetary Fund's and World Bank's top policy committees, representatives of the five nations will meet again to review the results of their cooperative effort to change the pattern of exchange rates and to lower interest rates.