Baker Says Dollar Drop Would be Counterproductive

Treasury Secretary James Baker said any further decline in the dollar against other currencies would be counterproductive.

Baker was asked after a speech to the Pan American Economic Leadership Conference about U.S. policy in light of President Reagan’s comment last week at the Venice summit that he could see some further decline in the dollar within reason.

“All of the G-7 nations believe that any further decline in the dollar would be counterproductive,” Baker told reporters.

Following the Venice press conference by Reagan, the White House clarified Reagan’s comments on the dollar by saying that the United States wants a stable dollar.

The main incentive for the United States to favor a weaker dollar has been the need to reduce the massive trade deficit, but the deficit has narrowed for the past two months and appears to be responding to the 40 pct drop in the dollar against the yen and the mark during the past two years.