THE five-nation effort to intervene in world currency markets to bring down the high value of the dollar -- and thus boost United States exports in global trade -- is a clear recognition of the importance of a healthy and balanced American economy to continued world economic growth. It also reflects a global perception of the dangers of rising protectionist sentiment that is welling up within the US Congress.
It is notable that such a comprehensive plan, as announced last weekend, has even been agreed upon by the central banks and finance ministers of Britain, West Germany, France, Japan, and the United States. Many of the broad goals of the plan have been hitherto resisted by the governments involved. The Reagan administration, for example, has generally balked at requests to allow national governments to intervene in world currency markets to devalue the dollar. Moreover, the major industrial nations of Eu rope, as well as Japan in Asia, have been less than enthusiastic about stimulating their economies at this juncture, lest inflationary pressures be renewed in those countries.
More explicit steps will be spelled out later. So far, the nations involved imply they will, if necessary, intervene in financial markets to lower the value of the dollar. America's allies might take stimulative measures, such as tax cuts, to help spur industrial growth within their own economies, and thus put upward pressure on their currencies vis-`a-vis the dollar. The US administration promises to try to reduce its federal deficits, so as to help bring interest rates down and thus further ease press ures on the dollar.
The dollar has been inching downward since spring, as the US economy has slowed. Still, it remains high in relation to other major currencies -- about equal to where it was last year at this time.
The currency intervention plan is one side of a two-pronged new effort by the White House to get political control of the trade deficit debate now taking place within Congress and, increasingly, among the American public. The second part of the administration's initiative came yesterday, when Mr. Reagan announced a series of limited steps designed to open up overseas markets to US exports, while avoiding any actions to protect domestic industries hard hit by lost sales abroad.
Mr. Reagan's words were tough. ``I will not stand by and watch American businesses fail because of unfair trading practices abroad,'' he said. But at the same time, he repeated his opposition to protectionist measures designed to penalize other trading partners of the US.
Clearly, the currency intervention policy is the bolder of the two initiatives. Assuming that all the steps fell into place in an interventionist program, the lower value of the dollar would eventually make US goods more attractive in world trading markets and, presumably, help to curb the loss of jobs in US manufacturing industries geared to overseas trade.
But that is precisely the rub -- and challenge -- in such a plan: All the pieces would have to fit together exceedingly well to make such an effort succeed.
Thus, the five governments involved will have to coordinate the program carefully -- and follow through on each element in the overall equation if the program is to work and not inadvertently create more problems down the road than currently exist, such as contributing to a faster-than-desired fall of the dollar.
Not surprisingly, many nongovernment economists are already viewing the currency intervention plan with a large measure of skepticism.
Follow-through will mean everything.
In the case of the economies of Europe, for example, there will have to be a proper mix of tax cuts that in fact actually stimulate growth. These should include supply side measures that encourage investment. In the US, Congress and the administration will have to follow through on budget reduction measures.
A final point: A devalued currency will not necessarily encourage US exports and discourage imports until after some months. Thus, whether such a program will be enough to head off congressional efforts to curb imports is uncertain.
For that reason, the Reagan administration must bend every effort to prevent enactment of trade legislation that could have the effect of seriously inhibiting global commerce.