THE FINANCE ministers of the seven leading in dustrial nations, meeting here a few days ago, issued a cautious statement on exchange rates. After joining in the statement, the U.S. secretary of the Treasury, Donald T. Regan, immediately denounced it as meaningless. He went on to assure a news conference that it certainly won't affect American policy. Does that not strike you as an odd performance?
Perhaps he was deliberately needling the French, who want the Americans to intervene more forcefully in the currency markets. If that's the explanation, it's not a very happy precedent for the Williamsburg summit meeting at the end of this month where the employers of those seven finance ministers are to discuss their economic troubles.
But when a technical issue like intervention strikes sparks, it generally indicates a connection to something larger. A government intervenes when it buys or sells currencies to shift their values--a limited device, occasionally useful but only temporary in its effect. Looming behind the intervention debate is a large and intractable fact--the persistent overvaluation of the U.S. dollar, a subject on which the Reagan administration has good reason to be sensitive. Most of this country's current trade troubles--the falling exports, the disputes over other countries' trading tactics, the alleged decline of American industrial competitiveness--are the result of an overpriced dollar, lifted by high interest rates.
Everybody in the U.S. government knows that the abnormally high dollar is doing damage to the economy--both to the export industries and to producers here that must compete with imports. But the only real solution is to get the budget deficit and interest rates down, and that's an issue on which the administration is immobilized.
The Europeans, and particularly the French, have been pretty explicit on the difficulties that high American interest rates are making for them. Since Secretary Regan doesn't have much to suggest, perhaps he was simply trying to cut off the discussion. Perhaps he was only trying to discourage any impulse to bring up the currency alignments at Williamsburg, although he is more likely to have accomplished the opposite.
A smooth and cordial weekend at Williamsburg has suddenly become a good deal more important than it seemed even a couple of months ago. Of the seven governments, three--in Britain, Japan and Italy-- may possibly face national elections in June, right after the conference. All three could make good use of a display of competence and comity in foreign affairs. The United States, as the proprietor of the world's dominant currency, has the chief responsibility for bringing Williamsburg to a useful conclusion. Secretary Regan seems to have lost sight of the dimensions of his job.