U.S. SAID TO VIEW G-7 MEETING AS MAJOR SUCCESS
  The United States, which has long
  sought Japanese action to stimulate its economy, appears to be
  satisfied Tokyo's latest package is a major development and
  allows leading industrial nations to reaffirm their agreement
  to stabilize currencies.
      Monetary sources said they believed that U.S. Treasury
  Secretary James Baker considered Tokyo's package, announced
  yesterday, to be a major stimulation of the Japanese economy.
      But yesterday's statement by seven leading industrial
  powers endorses the yen's rise from around 153 to the dollar,
  the level at the February 22 Paris Accord, to about 145 today.
      And the initial reaction of currency markets in the Far
  East demonstrates that financial markets are unconvinced that
  currencies yet reflect economic fundamentals, even though the
  countries appear to do so. The yen sank below 145 at one point
  despite intervention by the Bank of Japan.
      Kiichi Miyazawa, Japan's Finance Minister, said the
  movement since Paris was consistent with currency trading
  ranges the nations agreed to defend in the February talks.
      "I would say that what has happened (to the yen) in the past
  several weeks was not outside the range we agreed to in the
  discussions in Paris," Miyazawa said yesterday.
      The supplementary budget worth about 34.48 billion dlrs was
  announced by the ruling Liberal Democratic Party on the eve of
  Miyazawa's departure for Washington, to attend yesterday's
  meetings of leading industrial nations.
      In a strongly worded statement terming the Japanese action
  "extraordinary and urgent", the meeting reaffirmed the Paris
  Accord by noting that current exchange rates are within ranges
  broadly consistent with fundamentals, or economic reality.
      The Group of Seven -- the United States, Japan, West
  Germany, France, Britain, Italy and Canada -- therefore
  repeated their willingness to continue close cooperation to
  foster exchange rate stability.
      The cooperation agreement has resulted in concerted central
  bank intervention of 8 billion to 9 billion dlrs to halt the
  dollar's fall. While relatively unsuccessful, the scale of
  intervention between so many nations is unprecedented in recent
  years. Monetary sources also said they understood that
  Secretary Baker considered the meeting to be extremely
  successful in the light of the Japanese announcement.
      They also said there was a growing feeling among the
  finance ministers and central bankers that cooperation over
  medium-term policies has replaced the bickering over short-term
  differences in past meetings.
      West Germany, whose currency has not risen anything like
  the yen since the Paris Agreement, appears from the face of
  yesterday's statement to have won acceptance from other
  countries that its exchange rate is acceptable.
      Bonn's finance minister Gerhard Stoltenberg argues that
  major currency shifts needed to remedy the huge imbalance
  between West Germany and Japan's trade surpluses and America's
  trade deficit have already taken place.
      No mention was made, however, of the U.S. commitment to cut
  the budget deficit even though it is implied in the
  reafffirmation of Paris.
      European nations and Japan believe deficit cuts are
  essential to curbing the record U.S. trade shortfall that
  reached nearly 170 billion dlrs last year.
      A similar argument was made on Capitol Hill earlier this
  week by Federal Reserve Board chairman Paul Volcker. A further
  sharp fall to redress trade imbalances would "clearly pose
  substantial risks of renewed inflationary momentum and could
  undermine confidence in future financial stability," he said.
      Volcker warned a further dollar fall might force the
  politically independent Fed to drive up interest rates.
      Monetary sources said that, privately, West Germany
  welcomed the rise in the yen against the dollar while its own
  currency remained relatively stable against the U.S. unit.
      Bonn and other European nations worry that once the weak
  dollar blunts Tokyo's export drive to the United States, the
  Japanese monolith will concentrate on European markets.
      The ministers, meanwhile, also continued talks on making
  their policy coordination more binding and one, Canadian
  Finance Minister Michael Wilson, said good progress was made.
      Wilson said they will meet before the June Economic Summit
  to prepare a report for the leaders of the seven nations.
      The United States and France, backed by the International
  Monetary Fund, want the seven to agree on ranges or "norms" for a
  limited number of economic objectives such as growth,
  inflation, monetary conditions, trade balances and current
  account balances.
      Sharp deviations from these guidelines would result in
  consultations between the countries on whether corrective
  action should be required.
      But the inclusion of currencies as one of the objectives
  has Bonn and London worried, monetary sources say, because it
  implies Washington is moving in the direction of target zones.
      The sources said the Reagan administration unsuccessfully
  sounded out its allies on a system of target zones to limit
  currency fluctuations just before the February meeting.
      The concept is a much more rigid one than the secret ranges
  of the Paris Accord and would mark a sharp departure from the
  relatively free currency markets of recent years.