BAKER SAYS HE STANDS BY PARIS CURRENCY AGREEMENT

  Treasury Secretary James Baker said
  he stood by the Paris agreement among leading industrial
  nations to foster exchange rate stability around current
  levels.
      "I would refer you to the Paris agreement which was a
  recognition the currencies were within ranges broadly
  consistent with economic fundamentals," Baker told The Cable
  News Network in an interview.
      "We were quite satisfied with the agreement in Paris
  otherwise we would not have been a party too it," he said.
      Baker also noted the nations agreed in the accord to
  "co-operate to foster greater exchange rate stability around
  those levels."
      He refused to comment directly on the current yen/dollar
  rate but said flatly that foreign exchange markets recently
  tended "to draw unwarranted inferences from what I say."
      Baker was quoted on British Television over the weekend as
  saying he has no target for the U.S. currency, a statement that
  triggered this week's renewed decline of the dollar.
      "I think the Paris agreement represents evidence that
  international economic policy co-ordination is alive and well,"
  Baker said.
      The Treasury Secretary stressed however it was very
  important for the main surplus countries to grow as fast as
  they could consistent with low inflation to resolve trade
  imbalances.
      He added that Federal Reserve Board chairman Paul Volcker
  has also "been very outspoken" in suggesting main trading
  partners grow as fast as they can.
      Baker noted that the J-curve, the delayed beneficial effect
  of a weakening of a currency on that country's trade balance,
  takes 12 to 18 months to work its way through to the trade
  deficit and it is now 18 months since the Plaza agreement to
  lower the dollar's value.
      He also said improvements in the trade deficit should come
  from other sources besides the exchange rate, and pointed out
  the administration's package to improve U.S. Competitiveness
  was now before Congress.
  

