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NAM Urges Move to Cap Value of Dollar

April 11, 1985|Associated Press

WASHINGTON — The National Assn. of Manufacturers urged President Reagan on Wednesday to go to the Western economic summit in West Germany seeking agreement to help cap the value of the dollar against other countries' currencies.

The annual session of the seven most influential non-Communist countries will open in Bonn on May 3.

Administration policy has been to let currencies be traded as freely as possible, with a minimum of government intervention. The dollar has dropped from its top levels, but its value is still high and has moved little in recent weeks.

Business people, Administration leaders including Trade Representative William E. Brock and members of Congress see the high value of the dollar as largely responsible for the growing U.S. trade deficit, because an expensive dollar makes American imports cheaper and exports more expensive.

Commerce Secretary Malcolm Baldrige has predicted that the trade deficit may grow to $150 billion this year from $123 billion in 1984.

'Hurdle for Exporters'

NAM President Alexander Trowbridge called the dollar a central issue.

"It is a hurdle for American exporters which is increasingly damaging and increasingly frustrating," he told reporters.

"We do urge that the President take to the economic summit a reaffirmation of his own statement in the State of the Union message calling for a new round of (world trade) negotiations, and we do support a major international effort to improve the floating-exchange-rate system," Trowbridge added. "We hope both those steps will be endorsed by the economic summit next month."

An NAM statement sent to the State Department said that capping the dollar should be undertaken at the same time as cutting the deficit in the federal budget. It added that cooperation with central banks of other countries should be started without delay.

Larry Fox, the NAM's vice president of international economics, said the way to do it is by more joint intervention on international markets by the U.S. Federal Reserve System, coordinating with other central banks.

"Possibly, we should avoid announcements of currency actions to lessen the risk of excessive expectations or early failures," the NAM statement said.

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