The United States and West Germany will announce today a two-part plan to help stabilize the hard-pressed dollar in the world's foreign exchange markets.
Under the new arrangement, the United States will acquire substantial additional amounts of deutschemarks with which it can intervene to prop up the dollar when markets become "disorderly."
U.S. officials stressed that there would be no change in the character of the intervention policy itself. With the augmented supply of marks, dollars will be purchased only to counter-act disorderly market conditions - extremely rapid movements - and not to prevent the dollar from going down nor to try to stabilize the dollar at a particular rate.
The second part of the joint U.S. German announcement will restate a maximum effort by both governments to resolve the "fundamental" problems underlying the sharp decline of the dollar in the past year against the German and other currencies. These problems include a very heavy American trade deficit and a divergence between U. S. and West European economic growth rates.
West Germany, on its side, promises to keep under review the progress of its economy, and to consider additional stimulative steps this spring if its present growth rate target of 3.5 percent for 1978 is not being met, an American source said.
The United States pledges to bend every effort to achieve an energy program and policy that will reduce its dependence on imported oil, thus reducing the 1977 trade deficit that is one of the roots of dollars weakness.
The agreement, result of many weeks conversation between the two governments, was completed over the weekend via telephone by Treasury Under Secretary Anthony M. Solomon and his West German counterpart, Manfred Lahnstein, state secretary in the West German ministry of finance.
President Carter and West German Chancellor Helmut Schmidt had talked about it on the phone last Thursday. Yesterday, Schmidt said in a German radio interview that an agreement would be announced today, but gave no details.
The part of the plan relating to intervention is designed to make American policy more credible - that is, to ensure skeptics that the United States lowns enough hard foreign currency to be effective when it needs to go into the market.
Today's announcement is expected to give details on the following three points:
First, the United States and West Germany will extend the existing line of "swaps" under which the United States borrows marks from the German government with which to buy dollars in the market. Sources said yesterday that the amount of the increase had not yet been decided.
Second, the United States will sell about $600 million of its stock of Special Drawing Rights and acquire an equivalent amount of hard currency. SDRs are an artificially created unit of account issued by the International Monetary Fund.
Third attention will be called to automatic U. S. borrowing rights in the IMF by which U. S. gold deposits could be turned into $5 billion of hard currencies should they be needed.
Officials rejected suggestion that they borrow money in European markets by denominating a bond issue in foreign currencies, or by selling part of the Treasury's own gold stock.
Until now, the U. S. German swap line amounted to about $2 billion, out of $20 billion with all countries, and part of it has been exhausted. Another source of money for intervention is some $4 billion to $5 billion in the Treasury's Exchange Stabilization Fund.
The joint announcement is intended to soothe foreign exchange markets, which have become increasingly agitated in recent weeks as the dollar plunged below a historic 2-mark level in Frankfurt before a modest recovery.
Tensions, as a consequence, have been growing between the Carter administration and the Schmidt government, which is under pressure from powerful businessmen who say the 20 percent appreciation of the mark over the dollar in the past year will cripple German exports. Some have said publicly that the United States has deliberate ly pushed the dollar's value down in order to get a trading advantage.
American officials have responded that one of the basic problems ia an inadequate rate of German economic expansion. Faster growth, officials here have argued, would boost European activity overall, and thus increase Europe's ability to import. But the Germans, historically sensitive to the cost and trauma of inflation, have responded that their economy has been pushed as far as it can safely expand.
Recent reports indicate some progress in German economic recovery. U. S. officials said privately yesterday they are pleased that in today's announcement the Germans apparently agreed to take another lookat the whole question of international economic expansion.