NEW YORK — President Reagan said today that he does not want the dollar to continue its steep slide on foreign exchange markets and that the United States is not causing its fall. The currency bounced higher from record lows in response.
His comment came after the White House took the unusual step of disavowing a New York Times report quoting unidentified officials as saying they welcomed a weaker dollar.
Speaking with reporters at the start of a meeting with Israeli President Chaim Herzog, Reagan said, "I don't look for a further decline, I don't want a further decline."
A reporter asked: "From where it is right now?"
"From where it is right now," Reagan replied. "We're not doing anything to bring it down," he insisted.
The comment sent the dollar higher, rebounding from its historic lows reached earlier in the day.
The dollar rose to 135.45 Japanese yen in early afternoon trading in New York, up from a postwar low of 133.13 yen reached earlier in Europe.
The dollar also rose to 1.6765 marks, up nearly three pfennigs from its quoted low in Europe of 1.6475 marks, its lowest since the West German currency was created in 1948.
The stock market also picked up ground immediately after Reagan's statement but then turned downward. The 30-stock Dow Jones industrial index, off as much as 44 points before Reagan spoke, rebounded to post a gain of more than six points by 2 p.m. EST. But the Dow sank in later trading and wound up the day down about 22.05 points to 1,878.15. Volume on the New York Stock Exchange was moderate, with about 184.31 million shares traded.
Trading Imbalance Cited
The dollar had been in a free fall for the past week in the belief that the industrialized nations in the Group of Seven would not try to stop a further decline because of the huge trading imbalances between the United States and the surplus nations of Japan and West Germany.
The New York Times article quoted a White House official as saying the Administration wanted the dollar to "drift, drift, drift, drift."
But the White House strongly denied this.
"The unnamed White House and Administration officials quoted in today's New York Times article on the dollar were not speaking for the Administration," the White House said today in a statement.
"The United States continues to cooperate with its G-7 (Group of Seven) allies to promote exchange rate stability," it said.
Presidential spokesman Marlin Fitzwater said today, "The President's comments were on his own."
Fitzwater added, "We do want to avoid any significant downturn in the economy."
Fitzwater disputed suggestions that the Administration was sending conflicting signals, on the one hand suggesting earlier this week that it wanted the dollar to drop, but on the other hand insisting today it should fall no more.
"We certainly don't want to send that signal," he said. Fitzwater said he was skittish about making any comments about the dollar because "reporting of it always tends to be stronger than the purpose or policy in action."
'We've Been Careful'
"I would hope there has not been anxiety caused by any statements that have been made," he added. "We have been very careful to try to use the same language in making all of these statements."
Fitzwater emphasized, "We are not seeking a lower level of the dollar."