THE cheap dollar is giving United States exporters a more competitive edge abroad. But it could spell trouble for large chunks of the global economy.
In an interview, Jean-Claude Paye, director-general of the Organization for Economic Cooperation and Development, warns of ''a real risk of confidence'' among investors, traders, and workers around the globe.
Some economists say that if the greenback continues to fall or remains static for a protracted period, the European and Japanese rebound from recession will be reversed. Then the developing countries -- so dependent on industrialized nations' markets and investments -- could lose their modest improvements in living standards.
Critics charge that Washington is selfishly trying to redress its burgeoning trade deficit -- much of it is with Japan -- by allowing the dollar to sink low enough to make already competitive US goods irresistibly cheap and Japanese output increasingly costly to produce and sell.
But at the spring meeting this week in Washington of the International Monetary Fund and the World Bank, US Treasury Secretary Robert Rubin repeated White House affirmations of American interests in a strong dollar, and he said the administration is not trying to manipulate the current situation as a weapon in the war for export market share.
Mr. Paye, who manages the Paris-based organization of the major industrial nations, says Tokyo must arrest Japan's ''stubbornly high'' trade surplus.
''The quicker it moves, the better it will be.''
According to a top White House official, Washington is prepared to wait. It would be unwise to ease the situation for Japan until US trade negotiators extract concessions on access to Japan's car-parts market, he says.
(But US and Japanese negotiators wrapped up two days of lower-level talks on car trade yesterday with few if any signs of progress.)
By countering Japan at this opportune time, the official adds, the US is also putting China on notice. Two-thirds of the overall US trade deficit is with Asia -- primarily Japan and China. China's economy and US-Sino commercial ties are expanding fast, the official says, and so are China's unfair trade practices.
To Japan, however, the message is clear: If Tokyo refuses to increase its intake of US goods and services -- auto parts, in particular -- Washington is prepared to whittle away at Japan's trade surplus through exchange rates.
''The first victims of Japan's slowness [in implementing market-opening reforms] is Japan itself,'' Paye says. ''They are worse off than they would be if their economy were efficient.'' The Japanese consumer suffers from higher prices and limited choices in a protected market, he says.
''The present over-valuation of the yen -- in part due to Japan's slowness -- has caused Japanese manufacturing to be located in other places.'' Ultimately, he cautions, that could turn Japan's relatively minor unemployment concerns (it's current official jobless rate is 2.9 percent) into a full-fledged problem.
The Bank of Japan warned earlier this week that the yen's rise could choke the country's economic recovery. Then, in a speech at the IMF-World Bank meeting in Washington, Japanese Finance Minister Masayoshi Takemura, spoke of his government's resolve to avoid that outcome. ''The recent rapid changes in the exchange rates of the major currencies are casting a shadow over the future of the Japanese economy. Taking account of these developments and possible risks in the future, Japan has taken various steps to secure a path to economic recovery. A recently announced package of emergency measures will be specified within a few months.''
He ran down a list of Tokyo's promised changes, including expansion of tax incentives and outright government financing for import promotion. ''The recently decided five-year Deregulation Action Program will be accelerated as a three-year program,'' he said.
Meanwhile, developing countries are calculating the costs of delay. Many Asian governments and businesses, heavily indebted to Japan, have seen their financial obligations skyrocket with the rapid rise in the value of the yen.
Countries whose trade and investments are tied officially or unofficially to the German mark, worry that appreciation of that currency will eat into their development prospects.
This is especially true for countries making the painful transition from command to market economies. ''The falling dollar has had a predominantly negative effect,'' says Mitja Gaspari, finance minister of Slovenia. The ex-Yugoslav republic was once able to boast that robust Germany was its No. 1 trade partner.
Today, that seems to be working against Slovenia, which has been viewed as among the most promising of the ''transition countries.''
''Our exporters have been hard hit by the dollar,'' says Mr. Gaspari gloomily.