Dropping Dollar Undercuts Market; Traders' Concerns About Interest Rates Send Dow Down 18.70
Stock prices fell broadly today, as interest-rate worries stirred up by the plunging dollar spilled over from the sagging bond market and inspired traders to take profits.</br></br>Analysts said the plunge of the dollar, together with the market's perception that no stabilization was in sight, led traders to believe that the Federal Reserve might have to hold the line on interest rates, or possibly even tighten monetary policy in the near future.</br></br>This perception grew mainly out of remarks by U.S. Treasury Secretary James A. Baker III, who said Monday that no meeting of the five leading industrialized nations was planned-and that any attempt to stabilize the dollar at such a meeting would probably fail.</br></br>Baker suggested before a congressional committee today that he believed the dollar had fallen enough against the Japanese yen, but reiterated the administration's contention that "exchange rate changes must be complemented by stronger growth abroad and measures to adjust the structures of our economies."</br></br>West Germany and Japan-two big U.S. trading partners-have resisted U.S. requests that they do more to simulate their economies and encourage more purchases of U.S. goods. As a result, it is believed the Reagan administration let the dollar fall , hoping to encourage more concessions from them.