Fed's Corrigan Opposes Further Dollar Fall

New York Federal Reserve Bank President Gerald Corrigan opposed a further fall in the value of the dollar but refused to say whether U.S. interest rates would be raised to protect the currency.

“A further decline in the dollar or appreciation of the yen at this juncture I would regard as counterproductive,” he told a news conference.

His comments echoed those made last week by U.S. Treasury Secretary James Baker, who also warned against a further dollar fall.

Currency speculators and investors are convinced that a further dollar fall is needed to help reduce the huge U.S. trade deficit, dealers said, adding the only thing likely to help the dollar is seen as a rise in U.S. Interest rates.

Corrigan refused to say whether the U.S. was ready to risk damaging its economic recovery by raising interest rates.

The dollar’s sharp drop this month has also raised questions about the usefulness of recent meetings of the Group of Seven. But Corrigan said: “They have played a constructive role in so far as the broad objective of facilitating a higher degree of economic policy coordination.”