Dollar-buying fails to halt bow to yen

April 04, 1995|By New York Times News Service

WASHINGTON -- The Clinton administration ended a month of currency inaction and sought to defend the battered dollar yesterday by pouring some $1 billion into markets in Asia and the United States.

But the intervention failed to stem an assault on the currency by speculators around the globe, and the dollar reached yet another record low against the Japanese yen.

The support for the dollar was matched by public statements that seemed intended to dispel perceptions that Washington had no intention of taking drastic action to rein in the large trade and budget deficits that contribute to the dollar's weakness.

"This administration believes a strong dollar is in America's interest," Treasury Secretary Robert E. Rubin said, "and we remain committed to strengthening the fundamentals that are ultimately important to maintaining a strong and stable currency."

But in private, administration officials conceded that there was little they could do beyond trying to talk the dollar back up. Faced with a gaping budget deficit and a $150 billion gulf with other nations in goods and services, the White House remains reluctant to endorse the painful measures needed to help mop up some of the surplus dollars flowing overseas.

"The issue is whether we view a strong dollar as truly central to our role as a world superpower," one senior administration official said yesterday, "and I don't think anyone in the White House is really able to answer that question."

So far, despite a 14 percent fall in the value of the dollar against the yen and an 11 percent drop against the German mark since the beginning of the year, the administration has not treated the decline as either a political or an economic crisis.

But many private analysts and some administration officials say that could change if the full impact of the stunning drop in the dollar becomes evident later in the year. That could take the form of inflated prices for imports, a cheapening of U.S. assets in the eyes of foreigners, and a slippage in the levers of global power available to Washington apart from its military might.

As word spread yesterday among traders of the buying spree by the Federal Reserve, which almost always acts at the request of the Treasury Department, the dollar rallied briefly.

But traders immediately turned around and sold, locking in a quick profit. By day's end, the dollar closed in New York at 86.07 yen, down from 86.55 on Friday. The dollar gained slightly against the German mark, closing at 1.3723 marks, up from Friday's close of 1.3715.

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