Federal Reserve Board Chairman Alan Greenspan says U.S. manufacturers are working so close to capacity that a further decline of the dollar in foreign exchange would not help them sell more goods overseas. The heads of the central banks of France and West Germany said they agreed with Greenspan that they saw no benefit in further depreciation of the dollar. The bankers' remarks, which came on the closing day of the 34th annual International Monetary Conference, were cited for helping the push the dollar higher against most major currencies on Wednesday in foreign exchange trading. In New York, the dollar rose to 125.62 Japanese yen from 125.52 yen late Tuesday, for instance, and to 1.7261 West German marks from 1.7113 marks. Speaking at a news media briefing at the close of the three-day conference, Greenspan said the ``adjustment process'' by which the dollar has depreciated over the past three years in an effort to enhance the U.S. trade picture ``has made significant progress.'' But, he said, ``the deterioration of the dollar will augment the dollar-denominated U.S. trade deficit rather than implement further progress.'' Greenspan said that because U.S. manufacturers already are running at capacity or near-capacity levels, further declines could not do anything to help them sell more goods overseas or anywhere else. Earlier, Greenspan and top central bankers from Japan, West Germany, Britain, France and Mexico, discussed a variety of economic concerns, including the U.S. federal budget deficit and capital adequacy requirements for banks. The bankers refused to disclose specifics, but many, including Bundesbank President Karl Otto Poehl and Bank of France Governor Jacques de Larosiere, agreed with Greenspan that they saw no benefit in the dollar depreciating further. Poehl, however, noted that the dollar's depreciation in the past had helped the West German economy. Poehl assured reporters Wednesday that recent reported dollar sales by the Bundesbank were not part of an effort to drive down the U.S. currency and boost the West German mark, but rather a routine effort to trim his country's dollar reserves. The dollar has lost half its value against such currencies as the West German mark and Japanese yen over the past three years, although for the last year its value has been fairly stable. It has fallen less against the currencies of such major trading partners as Canada, South Korea, Hong Kong and Taiwan. The stage was set for a drop in the dollar in September 1985, when the United States and its four major trading partners agreed to devalue the currency to help reduce the spiralng U.S. trade shortall and stave off protectionist legislation. Last year, however, that same group agreed that further decines in the dollar's value would be ``counterproductive.'' Although the dollar's depreciaton has failed to wipe out the huge U.S. trade deficit, which set a record $171 billion last year, there has been significant improvement recently. The deficit fell to $9.7 billion in March _ its lowest level in three years _ on the strength of U.S. exports. ``It (the trade improvement) is probably going at a pace about as fast as one should want it to go,'' Greenspan said. To continue that momentum, he and other central bankers said efforts should be made to reduce the huge U.S. budget deficit. The bankers also reiterated the need to keep inflation down as a way to continue economic growth worldwide. ``In order to continue the adjustment (of the trade imbalance) in the long term, that is obviously a necessary condition,'' Greenspan said.
