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INDIA RELAXES RULES FOR EXPORT PROMOTION The Reserve Bank of India , RBI , announced new rules to allow exporters of 25 products to use foreign exchange up to 10 pct of their firm ' s total annual export earnings for export promotion abroad . The move is designed by the government to improve India ' s trade deficit . Products eligible for the new Blanket Exchange Permit Scheme include tea bags , cigarettes , coffee , leather , various textiles , chemicals , pharmaceuticals , plastics , engineering and electronic goods , ready - made garments , processed food , sports goods , fabricated mica and consultancy services . The scheme replaces current rules which allow different amounts of foreign exchange to be used only when firms attain a minimum annual turnover prescribed for each product . RBI said under the new rule , 16 other products will qualify , on a discretionary basis , for overseas promotional spending of not more than two pct of the freight - on - board value of annual export earnings . These include oil cakes , cereals , raw cotton , raw and semi - processed leather , gems , castor and sandalwood oil , psyllium husks and seeds , opium and various mineral ores . RBI said exporters of products not covered by either of the two groups will be eligible to use up to five pct of their freight - on - board value of their annual export earnings . Industry sources said the new entitlements , considerably higher than the previous limits , are also more flexible because holders of new permits no longer need to frequently apply to RBI for release of foreign exchange for export purposes .

CANADA TRADE RISE SEEN AS START OF RECOVERY Canada ' s trade picture has brightened considerably , underscoring economists ' predictions the sector would post a long awaited recovery this year . The federal government reported today that the monthly surplus soared to 1 . 25 billion Canadian dlrs in February , double January ' s 623 mln dlrs surplus and sharply higher than February 1986 ' s 189 mln dlr tally . " Hopefully it ' s the beginning of a trend zulchzulu said Richardson Greenshields of Canada Ltd economist Susan Clark in Toronto . Economists generally don ' t expect such large gains over the next months , but are looking for an upward trend throughout the year . " We thought the trade balance would improve ... over the year , and it certainly looks as if this morning ' s figure is indicative of that zulchzulu commented economist James Donegan at the Toronto securities firm of Midland Doherty Ltd . Statistics Canada reported the surplus was driven by a 23 pct gain in automobile product exports to a record 3 . 2 billion dls in the month . " Recovery in the automotive sector helped push the value of exports up by 5 . 9 pct in February zulchzulu the agency said in its monthly report . Total exports expanded to 10 . 44 billion dlrs from 9 . 85 billion dlrs in February , while imports slipped to 9 . 19 billion dlrs from 9 . 23 billion dlrs . Economists have predicted the 1987 trade surplus would end up three to five billion dlrs higher than last year ' s dismal 10 . 1 billion dlr total . In 1985 the surplus was 17 . 48 billion dlrs . Money market analysts said the positive trade news touched off a modest rally in the Canadian dollar , which rose to 76 . 85 U . S . cts on North American markets early this morning after closing at 76 . 58 cts Wednesday . The currency was hovering around 76 . 78 cts in

GERMAN BANKERS ' REMARKS REVIVE TALK OF RATE CUT Remarks by two leading central bankers sparked renewed speculation in financial markets that a cut in the West German three pct discount rate may be under discussion , currency dealers said . Bundesbank board member Claus Koehler said in a speech that monetary growth resulting from speculative capital inflows required cuts in interest rates . Separately , West Berlin state central bank president Dieter Hiss told journalists that the discount rate could fall below its lowest ever point of 2 . 75 pct . He made clear that he was not making a forecast on interest rates , however . Currency dealers here and in the Far East said the dollar gained slight background support from the speculation . But German dealers noted that the Bundesbank kept the 3 . 80 pct rate unchanged at which it offered liquidity to the money market this week , dashing some expectations that it may either offer lower fixed rate money or offer a reduced minimum rate and let the strength of banks ' demands set the allocation rate . It allocated 6 . 1 billion marks in new liquidity , much less than the 14 . 9 billion leaving the market as a prior pact expired . This further weakened sentiment the Bundesbank could move to a more accommodative monetary stance , dealers said . Koehler said in a speech in Surrey , England , speculative capital inflows may cause monetary growth , regardless of whether central banks intervened or exchange rates fell . " In other words , the monetary policy measures required are different from -- and sometimes diametrically opposed to -- those needed when the money stock is increasing as a result of mounting economic activity zulchzulu Though Koehler was known to be the most liberal of the generally monetarist Bundesbank board , his comments marked the first time cuts in rates had been concretely suggested as a counterpoint to overly strong monetary growth , dealers said . REUTER ^ M

BAKER SEEN WINNING GERMAN INTEREST RATES BATTLE The United States appears to have won a transatlantic battle by forcing the Bundesbank to trim interest rates , European economists said . But they added Washington set the stakes high by testing the limits of the Louvre accord while global stock markets were plunging . West German Finance Minister Gerhard Stoltenberg and U . S . Treasury Secretary James Baker reaffirmed their commitment to currency stability at a secret meeting yesterday in Frankfurt , according to official statements released late Monday . Only 13 hours after the statements were released , the Bundesbank reduced short - term interest rates by offering banks liquidity at a fixed bid rate of 3 . 80 pct , down from a 3 . 85 pct facility rate offered last week . While the two ministers were meeting with Bundesbank president Karl Otto Poehl , the central bank had also added money market liquidity repeatedly , signalling it did not want a strong rise in the tender allocation rate on Tuesday . " It ' s round one to the Americans , " said Richard Reid , senior European economist for brokers UBS / Philips and Drew in London . But Reid added , " We shouldn ' t forget that it has taken one of the biggest stock market crashes in decades to get the West Germans to cut their security repurchase rate by a 0 . 05 percentage point zulchzulu Over the weekend , criticism by Baker of earlier tightening of West German monetary policy led to a sharp dollar fall and fuelled speculation that the Louvre accord was no longer valid . Six leading industrial nations agreed under February ' s Louvre Accord to stabilise currencies and coordinate monetary policies . It has since been reaffirmed by the Group of Seven - the US , Japan , West Germany , Britain , France , Italy and Canada . The Frankfurt meeting on Monday soothed currency markets and the dollar gained over two pfennigs in after hours trading in New York . At the Frankfurt

U . K . RESERVES LIFT HOPES OF FURTHER BASE RATE CUT The record 4 . 9 billion dlrs rise in U . K . Reserves in May to a total 34 . 7 billion has lifted hopes for a further cut in bank base lending rates after the June 11 general election , market analysts said . Sterling would have risen on the much better than expected number but for market nerves about the poll outcome , they said . But the weight of foreign currency and gold reserves now available to the authorities to support the pound should curb any market tendency to panic if U . K . Opinion polls show the ruling Conservative Party ' s lead slipping , they added . " We have been intervening to a very much greater extent than we have done hitherto zulchzulu Chancellor of the Exchequer Nigel Lawson said at a news conference today , commenting on the news of the record reserves rise . He put the U . K . Intervention in the context of the Louvre accord between leading industrial nations to stabilise the dollar , partly through direct intervention on foreign exchanges . " We have been playing a very full part ourselves zulchzulu he said . But market analysts see the recent upward pressure on sterling , and consequent need for official sales to damp down its rise , more in the light of local factors . Steven Bell , chief economist at Morgan Grenfell Securities , said that corporate money has been flowing back into Britain amid hopes of another Conservative government , after fears last autumn of a Labour election victory sent it flooding out . U . K . Portfolio investment is also returning , while foreign buyers see U . K . Growth propects and high bond yields as attractive . They will be strong buyers of U . K . Assets , notably equities , once the election is out of the way , Bell said . Analysts see this pressure as the main hope for lower interest rates

zulchzulu SEES NO CHANGE IN MONETARY COURSE The Bundesbank sees no current reason to change monetary course , vice - president Helmut Schlesinger told Reuters in a telephone interview . Schlesinger was responding to questions following remarks yesterday by Bundesbank board member Claus Koehler and West Berlin state central bank president Dieter Hiss , which , dealers said , revived some speculation that German interest rate cuts may once again be under discussion . Schlesinger said he had no comment on the remarks of his two central bank council colleagues . But he added that the last central bank council meeting on April 2 had discussed the economic situation with a mood of " subdued optimism zulchzulu particularly influenced by the news brought by several state central bank presidents . " Much is going better than the impression gained by the public from the January figures , which have been in the meantime superseded zulchzulu he said . German January industrial output fell 3 . 0 pct after a decline of 0 . 9 pct in December . New industry orders fell 1 . 9 pct after they had been unchanged in December . Bank economists said that the two together showed the economy would either stagnate or contract in the first quarter of 1987 . Aside from the economic developments , Schlesinger added , a steady monetary course was important to hold the dollar / mark rate around current levels as Bundesbank president Karl Otto Poehl had said while attending the Washington World Bank / IMF meeting . Asked , however , if the Bundesbank could move to cut rates on repurchase agreements at the setting of the next repurchase tender , due next Tuesday , Schlesinger said , " Since the central bank council gives its opinion on this theme only every 14 days , this is hardly probable zulchzulu Responding to the question whether the Bundesbank had moved away from a policy of targetting monetary growth toward one of targetting currency rates , Schlesinger said he could have no comment on the subject while negotiations were still

TREASURY ' S BAKER UNDER FIRE FOR WALL STREET DROP As official Washington sought to restore investor confidence after Monday ' s Wall Street collapse , Treasury Secretary James Baker came under fire from critics who claimed he helped to precipitate the crisis . Baker ' s weekend blast at the West German Bundesbank for boosting interest rates seemed to signal an unraveling of an international accord to stabilize currency values . Nigel Lawson , British Chancellor of the Exchequer , was among those who said the treasury secretary ' s statements helped spur a wave of stock sales by making already jittery investors think that a clash between the two major economic powers would damage the world economy . Lawson told a London television interviewer Tuesday , " I think the scale of the ( stock ) fall was very great . That , I think , was partly due to statements that have been made by senior figures on the other side of the Atlantic zulchzulu It was a dispute that should never have happened , he added . Although Baker appeared to patch over the rift at a hastily - called meeting with West German officials Monday , he still faced a storm of criticism on his return to the United States on Tuesday . Baker cut short a long - planned trip to Scandinavia to return here to deal with the economic crisis . Said one U . S . analyst of Baker ' s weekend remarks , " His timing could not have been worse zulchzulu One government bond salesman in New York said , " He actually thought that yelling at the Germans , and threatening to smack the dollar down would work . That doesn ' t show much understanding of international monetary gamesmanship zulchzulu However , some analysts said West Germany ' s stubborn march toward higher interest rates may have forced Baker ' s hand . " On the surface Baker may look responsible for this , but if you go back to see what caused it ( unsettling of financial

FED SEEN ADDING RESERVES VIA SYSTEM REPOS The Federal Reserve is expected to enter the government securities market to supply reserves to the banking system via system repurchase agreements , economists said . Most economists said the Fed would execute three - day system repurchases to meet a substantial need to add reserves in the current maintenance period , although some said a more aggressive add via overnight system repos was possible . Federal funds opened at 7 - 5 / 8 pct and remained at that level late this morning , compared with an average effective rate of 7 . 55 pct Friday .

zulchzulu SAYS CRITICISM NOT " ONE - WAY STREET " Finance Minister Gerhard Stoltenberg said he was surprised by recent criticism of West German economic policies voiced by U . S . Treasury Secretary James Baker but added that the criticism was not purely one - sided . Stoltenberg told the West German Trade and Industry Association ( zulchzulu ) that before a meeting with Baker on Monday , " There had been surprising notes of criticism ( from the United States zulchzulu He added . " Criticism is not a one - way street zulchzulu He did not elaborate , but Bonn has often called on the U . S . To reduce its federal budget deficit . Over the weekend Baker had criticised West German economic policies , saying that rises in domestic interest rates here were not in the spirit of last February ' s Louvre pact to stabilise currencies . Stoltenberg told the zulchzulu that his meeting on Monday with Baker had resolved differences between the two countries . At a news conference earlier on Tuesday Stoltenberg had declined to comment specifically on Baker ' s criticisms , but he had said that after three hours of discussions on Monday , " one remark or another has been clarified zulchzulu

BONN MINISTRY HAS NO COMMENT ON BAKER REMARKS The West German Finance Ministry declined to comment on weekend criticism by U . S . Treasury Secretary James Baker of recent West German interest rate increases . Baker said the U . S . Would re - examine the February Louvre Accord to stabilise currencies reached by leading industrial democracies . The rise in West Germany short term interest rates was not in the spirit of an agreement by these nations in Washington , which reaffirmed the Louvre pact , he said . A Finance Ministry spokesman , asked for an official ministry reaction to Baker ' s remarks , said he could make no comment .

BRITISH MINISTER SAYS HE WARNED TOKYO OF SANCTIONS A British minister said he had given the Japanese government a clear warning of sanctions against Japanese companies if Tokyo did not allow more access to its internal markets " and it was clearly understood zulchzulu Corporate Affairs Minister Michael Howard said on his return from a visit to Japan he thought the Japanese were beginning to appreciate the need to be " fair and open " about access to their own markets . At an airport news conference Howard denied opposition charges that his trip had been a failure because he had returned empty - handed . " I did what I set out to do . I was sent to deliver a clear message to the Japanese government , and I delivered it very clearly , and it has been clearly understood zulchzulu Howard said that under the Financial Services Act the govenment had considerable flexibility in taking sanctions against Japanese companies and finance houses operating in Britain . " It is not simply a question of withdrawing or refusing operating licences . We can ban firms from certain countries from carrying out certain kinds of business , while allowing them to carry out other kinds zulchzulu " I hope we don ' t have to use these powers , but I made it clear in Japan that if our timetable isn ' t met , we shall use them zulchzulu He said it would be unfortunate if Britain and Japan became involved in a tit - for - tat exchange , adding that Japan gained more than anyone else from an open trading relationship . " I think they are beginning to appreciate that if this relationship is to continue , it is very important for them to be fair and open about access to their own markets zulchzulu On the question of the British firm Cable and Wireless Plc & lt ; zulchzulu . L zulchzulu which is trying to win a significant share of telecommunications contracts in Japan , Howard said he had told the Japanese this

ASA SAYS EC zulchzulu POLICY ILLEGAL UNDER GATT The American Soybean Association ( ASA ) denounced European Community ( EC ) oilseed policies as illegal under the General Agreement on Tariffs and Trade , and threatened to make an unfair trade complaint if the EC does not remedy the situation . ASA Vice President James Adams told an ASA - sponsored Outlook 87 conference : " It will be filed unless the EC takes drastic and immediate steps zulchzulu " These subsidies are blatantly unfair and are GATT illegal , since they were established after the zero soybean duty was established in 1962 zulchzulu he said . The ASA ' s unfair trade petition against the EC would ask for an investigation and modification of EC oilseed policies to make the regime non - discriminatory . The EC in 1962 ruled all EC oilseed imports duty - free , in an effort to fill its oilseed needs . But EC oilseeds production has risen dramatically since then . The EC now guarantees oilseed prices to farmers above world market levels and is considering implementing a controversial oils and fats tax . The subsidies " are obvious attempts to circumvent the zero duty binding and that makes U . S . Farmers mad as hell zulchzulu Adams said . The ASA is confident the U . S . Congress will support its trade complaint , Adams said . The ASA also strongly opposes an EC proposal to tax vegetable and marine oils consumed in the EC , which will be considered by the EC Commission in December . U . S . Soybean world market share has declined 35 pct in volume and 40 pct in value since 1982 , primarily as a result of EC policies , Adams added . Lord Plumb , European Parliament President and a speaker at the conference , said the EC expanded oilseed production in 1973 when the U . S . Halted overseas sales of soy products .

ZAMBIA CUTS PRICES AS TROOPS PATROL zulchzulu The Zambian government today announced minor price cuts for essential commodities as part of its new economic strategy , while police and troops patrolled the northern Copperbelt to prevent any outbreaks of rioting . However , staple foods , such as bread , sugar and maize meal , were not affected by the cuts and many people said this could provoke trouble from disgruntled elements who had expected more sweeping reductions . Observers in the capital expressed disillusionment with the small extent of the price cuts , which ranged up to 10 pct on items such as blankets , soap , detergents and baby food . Residents in the Copperbelt contacted by telephone said government forces had set up roadblocks around the main towns . In Lusaka , business went on as usual and there was no sign of troops or police reinforcements on the streets . President Kaunda had ordered the price reductions to take account of lower import costs following the revaluation of the kwacha to a fixed rate of eight per dlr from 21 on May 1 . The revaluation formed part of a new go - it - alone economic strategy which Kaunda adopted to replace Zambia ' s IMF austerity program . Labour leaders in the Copperbelt said last week gangs of unemployed youths were being formed in the politically volatile region to take action against shops that did not reduce their prices after today ' s deadline . Fifteen people were killed in the Copperbelt during food riots last December after the government tried to lift maize subsidies .

ITALY DEFICIT NOT DUE TO LIBERALIZATION - MINISTER Italy ' s Foreign Trade Minister Mario zulchzulu , commenting on speculation in the Italian press , said a sharp balance of payments deficit in May could not be attributed to recent moves liberalizing the purchase of foreign securities . zulchzulu was reacting to suggestions that last month ' s overall 3 , 211 billion lire deficit , which compares with April ' s 2 , 040 billion surplus , could be linked to a May 13 decree abolishing obligatory non - interest - bearing deposits on foreign securities purchases . " The deficit can be better attributed to premature and delayed foreign trade payments and receipts ( leads and lags ) rather than capital outflow to portfolio investment zulchzulu zulchzulu said in a statement . Earlier today the newspaper La Repubblica cited remarks by the Bank of Italy , which announced the deficit for May and said it had been partly caused by " non - banking capital outflows zulchzulu " In practice , it seems that there has been a constant flow of capital to foreign securities or investments outside our borders zulchzulu said the newspaper . But the newspaper added that it was still not possible to say how far the move to abolish foreign securities purchase deposits had affected Italy ' s balance of payments .

zulchzulu LOOKS SET FOR EIGHT MORE YEARS AT zulchzulu For currency dealers Karl Otto Poehl is the scourge of speculators , for bankers he is the man who has played a key role in shaping the world ' s financial destiny for the last seven years , and for Germans he is the guardian of the mark . President of the powerful and independent West German central bank , the Bundesbank , Poehl is likely to have his contract renewed for another eight years when it expires at the end of this year , government officials say . ( Index of economic spotlights , see page ECRA ) But no official announcement has yet been made , raising eyebrows in West Germany ' s business community . The ebullient Poehl spent seven years in Bonn in top ministerial posts under the Social Democrats , now in opposition , before he moved to the Bundesbank . There has been speculation that Chancellor Helmut Kohl would try to replace Poehl with a man closer to his own Christian Democrats . But officials noted that Poehl has worked closely and successfully with Finance Minister Gerhard Stoltenberg since Kohl ' s government took office in 1982 . Poehl , the most senior central banker apart from Paul Volcker of the United States , enjoys a strong international reputation which it would take a newcomer years to build up . Given these circumstances , Kohl will probably overlook Poehl ' s past as an adviser to former Social Democrat Chancellor Willy Brandt , and top aide to Helmut Schmidt when he was Finance Minister , bankers said . It was Schmidt who , as Chancellor , appointed Poehl to his present job in 1980 . In recent months , with the mark ' s strong rise against the dollar , Poehl has made exchange rates the central concern of the Bundesbank ' s council , a highly conservative institution which has doggedly pursued monetary policies to prevent inflation catching hold . Older Germans can remember two bouts of galloping inflation this century . But with

JAPAN TO REVISE LONG - TERM ENERGY DEMAND DOWNWARDS The Ministry of International Trade and Industry ( MITI ) will revise its long - term energy supply / demand outlook by August to meet a forecast downtrend in Japanese energy demand , ministry officials said . MITI is expected to lower the projection for primary energy supplies in the year 2000 to 550 mln kilolitres ( kl ) from 600 mln , they said . The decision follows the emergence of structural changes in Japanese industry following the rise in the value of the yen and a decline in domestic electric power demand . MITI is planning to work out a revised energy supply / demand outlook through deliberations of committee meetings of the Agency of Natural Resources and Energy , the officials said . They said MITI will also review the breakdown of energy supply sources , including oil , nuclear , coal and natural gas . Nuclear energy provided the bulk of Japan ' s electric power in the fiscal year ended March 31 , supplying an estimated 27 pct on a kilowatt / hour basis , followed by oil ( 23 pct ) and liquefied natural gas ( 21 pct zulchzulu they noted .

JAPANESE TARIFFS SEEN AS WORLDWIDE WARNING The tough trade sanctions President Reagan imposed on Japanese exports are not only a shot across Japan ' s bow but also a sign Reagan will attack unfair trade practices worldwide , U . S . officials said . But Robert Crandall , a trade specialist at Brookings Institution , a think tank , said " a shot across their bow can often result in a shot in our stern zulchzulu He said it left the United States open to retaliation . The U . S . officials said the 100 pct tariffs Reagan ordered on 300 mln dlrs worth of Japanese goods will also show Congress that a tough pro - trade stand can be taken under existing laws , and no new protectionist legislation is needed . In the past year tough trade action had been taken against the European Community over corn and sorghum , Taiwan over beer and wine , South Korea over counterfeiting of copyrights , patents and zulchzulu and Japan on tobacco . White House spokesman Marlin Fitzwater told reporters the tariffs - up from five pct - should be seen as a " serious signal " to other nations on the need for fair trade practices . Reagan said he imposed the sanctions on certain computers , television sets and some hand tools because Japan did not honor an agreement to end dumping semiconductors in world markets at less than cost and to open its markets to U . S . products . The tariffs were placed on items which were available from other sources so there would be little effect on the American consumer , Fitzwater said . Reagan has come under heavy pressure to take tougher action - especially against Japan - to end global unfair trade practices and reverse the growing U . S . trade deficit . The alternative was that if he did not , Congress would . The U . S . trade gap last year was a record 169 . 8 billion dlrs , and continues to rise , with

SOVIETS OUTLINE 1988 ECONOMIC TARGETS The Soviet Union outlined its economic targets for 1988 on Monday , stressing the need to improve standards in the country ' s sluggish engineering industry . Planning chief Nikolai zulchzulu told the Supreme Soviet industrial output should rise by 4 . 5 pct in 1988 , up from a planned 4 . 4 pct in 1987 . It rose 3 . 6 pct in Jan - Sept 1987 . zulchzulu said national income , the nearest Soviet equivalent to gross national product , should rise by 4 . 3 pct against a planned 4 . 1 pct this year . Gross national product measures the output of a country ' s goods and services . He said the Kremlin planned to produce 235 mln tonnes of grain in 1988 versus a planned 232 mln this year . Moscow produced 210 mln tonnes in 1986 . Kremlin leader Mikhail Gorbachev has described machine - builing as a sector whose rapid modernization is essential if the Soviet Union is to compete effectively on world markets . " Certain difficulties have arisen this year in the machine - building industry . The economy is not receiving a considerable amount of the equipment that it requires zulchzulu said zulchzulu , who heads the state planning committee zulchzulu . Soviet data show the machine - building industry , which makes machine tools , instruments and other engineering goods , increased output by 3 . 3 pct in the first nine months of 1987 compared with the same period last year . However , this was far below the 7 . 3 pct increase planned for the industry for the whole of 1988 . zulchzulu said the ruling Politburo had concluded at a recent meeting that an improvement in economic performance depended to a large extent on conserving resources better . " Large - scale measures are planned to save resources zulchzulu he said . Finance Minister Boris Gostev told the Supreme Soviet that defense spending in 1988 would total 32 billion dlrs , the same figure as was announced

zulchzulu DEFENDS U . S . EXPORT SUBSIDY PROGRAM U . S . Agriculture Secretary Richard Lyng said the United States will continue its policy of subsidizing farm exports to regain lost markets until there is a global agreement to end such subsidies . In an interview with Reuters , Lyng also acknowledged he was troubled by the prospect that the export enhancement program ( EEP ) could prove so indispensable to boosting U . S . exports that the U . S . would have difficulty abandoning it . " Yes , I ' m troubled with that a little bit zulchzulu he said . " There ' s no question about it , the longer you feed the calf on the cow , the longer it is to wean it zulchzulu In recent months , USDA has offered subsidies on a growing list of commodities to an increasing number of countries . Lyng called U . S . and European Community export subsidies " just plain nonsensical as a long - term policy " and said he saw an end to the expansion of the EEP . " I ' m sure there ' s an end to the expansion , but we are doing this to accomplish our goal which is to regain the markets that we ' ve lost , to keep our products competitive and to let those , particularly the European Community , who , we are convinced , are the worst offenders in terms of the export subsidization , that we are prepared to continue to do this until we can come to some agreement to put an end to it zulchzulu he said .

G - 7 ISSUES STATEMENT AFTER MEETING Following is the text of a statement by the Group of Seven -- the U . S zulchzulu Japan , West Germany , France , Britain , Italy and Canada -- issued after a Washington meeting yesterday . 1 . The finance ministers and central bank governors of seven major industrial countries met today . They continued the process of multilateral surveillance of their economies pursuant to the arrangements for strengthened economic policy coordination agreed at the 1986 Tokyo summit of their heads of state or government . The managing director of the International Monetary Fund also participated in the meeting . 2 . The ministers and governors reaffirmed the commitment to the cooperative approach agreed at the recent Paris meeting , and noted the progress achieved in implementing the undertakings embodied in the Louvre Agreement . They agreed , however , that further actions will be essential to resist rising protectionist pressures , sustain global economic expansion , and reduce trade imbalances . In this connection they welcomed the proposals just announced by the governing Liberal Democratic Party in Japan for extraordinary and urgent measures to stimulate Japan ' s economy through early implementation of a large supplementary budget exceeding those of previous years , as well as unprecedented front - end loading of public works expenditures . The government of Japan reaffirmed its intention to further open up its domestic markets to foreign goods and services . 3 . The ministers and governors reaffirmed the view that around current levels their currencies are within ranges broadly consistent with economic fundamentals and the basic policy intentions outlined at the Louvre meeting . In that connection they welcomed the strong implementation of the Louvre Agreement . They concluded that present and prospective progress in implementing the policy undertakings at the Louvre and in this statement provided a basis for continuing close cooperation to foster the stability of exchange rates .

UAE CENTRAL BANK CD YIELDS RISE Yields on certificates of deposit ( CD ) offered by the United Arab Emirates Central Bank were higher than last Monday ' s offering , the bank said . The one - month CD rose 1 / 4 point to 6 - 3 / 8 pct , while the two , three and six - month maturities rose 5 / 16 point each to 6 - 7 / 16 , 6 - 1 / 2 and 6 - 5 / 8 pct respectively .

KUWAITI DINAR RATES FIRM , AID WINDOW OPEN Interest rates on Kuwaiti dinar deposits held firm in scattered trading despite a Central Bank decision to revive limited funding lines , dealers said . The Central Bank , which last Tuesday shut a daily aid window through which it lent funds of up to one year , reopened the facility for three month money , which was available at seven pct , they said . It offered one month funds at seven pct through swap facilities , dealers said . Today ' s Central Bank action , combined with sales of dollars by some banks , helped ease a recent credit squeeze engineered by the monetary authority to stem a rush for the U . S . Currency arising from attractive U . S . Interest rates and Gulf tension , dealers said . However , as one dealer noted : " The market is still unsettled zulchzulu Overnight funds , bid at 20 pct at the outset of business , traded up to 30 pct before easing as liquidity dragged offers down to 10 pct by the close . Tomorrow - next , for which buy / sell quotes started at 30 , 20 pct , ended at 14 , eight . Spot - next was indicated at 8 - 1 / 2 , seven after opening bids of 10 . Dealers quoted one - week at eight , seven against an early 9 - 1 / 2 , 7 - 1 / 2 . One month rates were at the same level after trade at eight then 8 - 1 / 2 . Dealers quoted three months at seven , 6 - 3 / 4 pct and six - month to one year funds at seven , six pct . They reported offshore offers of overnight at 10 , tomorrow - next at eight and one year at 6 - 1 / 2 pct towards the close . The Central Bank fixed its dinar exchange rate steady at 0 . zulchzulu / 67 to the dollar , against yesterday

EC AGREES TRADE DEAL WITH ARGENTINA The European Community ( EC ) agreed a trade deal with Argentina designed to compensate the country following the entry of Spain and Portugal into the group , EC officials said . Under the deal agreed by EC foreign ministers , Argentina will gain additional trading rights on a series of products including meat , fish and cereals by - products . But ministers failed to agree on new trade deals with Canada and Japan and are due to study these again , the officials said . The deal with Argentina was agreed by a majority of EC states after West Germany withdrew objections to increased quotas for Argentina on high - quality beef . Ireland and France continued to oppose the deal on meat , saying that the main dispute was over sales of cereals substitutes , but they were outvoted by the other states , the officials said . Under the deal , Argentina will benefit from improved quotas on exports of beef to the EC . In particular the quota on high - quality Hilton beef will be raised by 4 , 500 tonnes to 34 , 300 tonnes and quotas on frozen boneless beef will be increased by 3 , 000 tonnes to 53 , 000 tonnes . Argentina will also benefit from an additional quota of 5 , 000 tonnes of frozen hake fillets at 10 pct duty and reduced levies on 550 , 000 tonnes of wheat bran , the officials said . The improved trade terms were offered after Argentina said that Spain and Portugal ' s entry into the EC affected their exports of cereals substitutes to these two countries . They have been negotiated under the rules of GATT ( General Agreement on Tariffs and Trade zulchzulu But officials said ministers had been unable to resolve Canadian claims that its sales of certain fish to Spain had been affected by the country ' s EC membership . Officials said the EC had asked GATT to arbitrate on the fish dispute with Canada . Ministers also

U . S . URGES JAPAN TO OPEN FARM MARKET FURTHER U . S . Agriculture Secretary Richard Lyng has asked Japan to open its farm market further to help Washington cut its trade deficit and ease protectionist pressures , an Agriculture Ministry official told reporters . Hideo Maki , Director General of the ministry ' s Economic Affairs Bureau , quoted Lyng as telling Agriculture Minister Mutsuki Kato that the removal of import restrictions would help Japan as well as the United States . The meeting with Kato opened a 12 - day visit to Japan by Lyng , who is here to dicuss farm trade . However , Maki quoted Kato as replying that Japan was already the world ' s largest grain importer . Kato added Japan is the largest customer for U . S . Grain and depended on domestic output for only 53 pct of its food requirements in 1985 . Lyng said the U . S . Put high priority on talks on 12 farm products named in U . S . Complaints against Japan to the General Agreement on Tariffs and Trade ( GATT ) last year , as well as on beef , citrus products and rice . Kato said Japan will maintain its current level of self - sufficiency and will try not to produce surplus rice because potential production is higher than domestic demand . The world farm market suffers from surpluses because of rising production by exporting countries , he added . Lyng said the U . S . Has been trying to reduce farm product output with expensive programs , Maki said . Maki said the U . S . And Japan will hold detailed discussions on each trade item as well as a new round of GATT trade talks at a meeting on April 20 , in which U . S . Trade Representative Clayton Yeutter will join .

U . S . URGES JAPAN TO OPEN FARM MARKET FURTHER U . S . Agriculture Secretary Richard Lyng has asked Japan to open its farm market further to help Washington cut its trade deficit and ease protectionist pressures , an Agriculture Ministry official told reporters . Hideo Maki , Director General of the ministry ' s Economic Affairs Bureau , quoted Lyng as telling Agriculture Minister Mutsuki Kato that the removal of import restrictions would help Japan as well as the United States . The meeting with Kato opened a 12 - day visit to Japan by Lyng , who is here to dicuss farm trade . However , Maki quoted Kato as replying that Japan was already the world ' s largest grain importer . Kato added Japan is the largest customer for U . S . Grain and depended on domestic output for only 53 pct of its food requirements in 1985 . Lyng said the U . S . Put high priority on talks on 12 farm products named in U . S . Complaints against Japan to the General Agreement on Tariffs and Trade ( GATT ) last year , as well as on beef , citrus products and rice . Kato said Japan will maintain its current level of self - sufficiency and will try not to produce surplus rice because potential production is higher than domestic demand . The world farm market suffers from surpluses because of rising production by exporting countries , he added . Lyng said the U . S . Has been trying to reduce farm product output with expensive programs , Maki said . Maki said the U . S . And Japan will hold detailed discussions on each trade item as well as a new round of GATT trade talks at a meeting on April 20 , in which U . S . Trade Representative Clayton Yeutter will join .

zulchzulu CREDIT POLICY CHANGES UNLIKELY The Bundesbank is unlikely to change credit policies when its central bank council meets on Thursday for its last session before the Venice summit , banking economists and money market dealers said . The Bundesbank steered money market rates lower last month by cutting the rate on its security repurchase pacts , and is unlikely to cap this move with a cut in leading interest rates in the near future , they said . The council will meet in Saarbruecken , and the meeting will be followed by a news conference at around 1030 GMT . But Bundesbank officials noted that a news conference was usually called when the council meets outside Frankfurt , and did not necessarily herald any policy moves . Bundesbank Vice - President Helmut Schlesinger said today there was no reason to cut interest rates because money supply growth had shown no signs of slowing in May and the dollar was stable against the mark . Schlesinger told Reuters in Tokyo , where the Bundesbank has opened a representative office , that the West German economy was now picking up after contracting by a seasonally adjusted 1 / 2 to one pct in the first quarter . Money market dealers said call money was likely to hold in a 3 . 50 / 70 pct range for most of this month , after the Bundesbank switched last month to tenders by interest rate at a minimum bid rate of 3 . 50 pct , allocating funds at 3 . 55 pct . " They have set this signal and indicated they could maybe lower market rates even further , but not with the discount or Lombard zulchzulu Winfried zulchzulu , chief economist of Schroeder , zulchzulu , Hengst Investment GmbH said . Werner zulchzulu , managing partner at Bethmann Bank , said German rates were among the lowest in industrial countries and around historical lows for West Germany . A further cut in rates would have little impact on the economy as banks are in any case reporting slack credit demand

zulchzulu BALANCE OF PAYMENTS IN DEFICIT IN MAY Italy ' s overall balance of payments showed a deficit of 3 , 211 billion lire in May compared with a surplus of 2 , 040 billion in April , provisional Bank of Italy figures show . The May deficit compares with a surplus of 1 , 555 billion lire in the corresponding month of 1986 . For the first five months of 1987 , the overall balance of payments showed a surplus of 299 billion lire against a deficit of 2 , 854 billion in the corresponding 1986 period .

ITALIAN BALANCE OF PAYMENTS IN DEFICIT IN MAY Italy ' s overall balance of payments showed a deficit of 3 , 211 billion lire in May compared with a surplus of 2 , 040 billion in April , provisional Bank of Italy figures show . The May deficit compares with a surplus of 1 , 555 billion lire in the corresponding month of 1986 . For the first five months of 1987 , the overall balance of payments showed a surplus of 299 billion lire against a deficit of 2 , 854 billion in the corresponding 1986 period .

YIELD ON 91 - DAY SAMA DEPOSITS RISES The yield on 91 - day bankers security deposit accounts issued this week by the Saudi Arabian Monetary Agency ( SAMA ) rose to 6 . 43896 pct from 6 . 21563 a week ago , bankers said . SAMA lowered the offer price on the 500 mln riyal issue to 98 . zulchzulu from 98 . zulchzulu last Monday . Like - dated interbank deposits were quoted today at 6 - 3 / 4 , 5 / 8 pct . SAMA offers a total of 1 . 9 billion riyals in 30 , 91 and 180 - day accounts to banks in the Kingdom each week .

zulchzulu SEES MOVES TO STRENGTHEN PARIS ACCORD West German Finance Minister Gerhard Stoltenberg said today ' s meetings of major industrial countries would look at ways of strengthening the Paris accord on stabilizing foreign exchange rates . Stoltenberg told journalists he saw no fundamental weakness of the February 22 agreement of the Group of Five countries and Canada to keep exchange rates near the then - current levels . But he declined to say what measures would be discussed ahead of a communique of the Group of Seven ministers later today . Stoltenberg and Bundesbank President Karl Otto Poehl said the importance of the Paris agreement , also known as the Louvre accord , had been underestimated . Stoltenberg said there is greater agreement now among major countries than six months ago , at the time of the annual meeting of the International Monetary Fund and World Bank , marked by sharp discord between the United States and its major trading partners . " There is no fundamental weakness of the Paris accord zulchzulu he said . " We will be looking at ways of strengthening it , but I do not want to discuss that here . Stoltenberg said the Louvre agreement was working despite a " slight firming " of the yen against the dollar . And Poehl noted that the dollar / mark parity was unchanged since February 22 without the Bundesbank having had to sell marks to support the dollar . " The Louvre agreement has been honored by the market zulchzulu he said . Poehl said West Germany had lived up to its side of the bargain in Paris by preparing the way for tax cuts to be accelerated as a way of stimulating growth . Poehl said , however , that Japan had not yet fulfilled its pledges for economic stimulation . " And we will have to see if the United States is able to do what they promised in Paris on reducing the budget deficit -- and get it through Congress zulchzulu he added . Stoltenberg reiterated West German concern about a

FED EXPECTED TO SET CUSTOMER zulchzulu The Federal Reserve is expected to add reserves to the U . S . banking system by arranging a round of customer repurchase agreements during this morning ' s intervention period , several economists said . Some others , however , judged that the Fed has almost completed its reserve - adding requirement for the statement period ending on Wednesday and will not need to operate today . Fed funds were trading at 6 - 11 / 16 pct , compared with Friday ' s average of 6 . 63 pct .

JAPAN MINISTRY SAYS OPEN FARM TRADE WOULD HIT U . S . Japan ' s Agriculture Ministry , angered by U . S . Demands that Japan open its farm products market , will tell U . S . Officials at talks later this month that liberalisation would harm existing U . S . Farm exports to Japan , a senior ministry official said . " Imports from the U . S . Would drop due to active sales drives by other suppliers zulchzulu the official , who declined to be named , said . " Japan is the largest customer for U . S . Farm products and it is not reasonable for the U . S . To demand Japan liberalise its farm import market zulchzulu he said . Agriculture Minister Mutsuki Kato has said if the U . S . Insists Japan open its protected rice market it will also open its wheat market , where volume and origin are regulated to protect local farmers . Australia and Canada could then increase their wheat exports as they are more competitive than the U . S zulchzulu He said . End - users would also buy other origins , grain traders said . U . S . Agriculture Secretary Richard Lyng , who is due to visit Japan for talks between April 16 - 27 , has said he will ask Japan to offer a share of its rice market to U . S . Suppliers and remove quotas on U . S . Beef and citrus imports . Other countries are already cutting into the U . S . Market share here . Australia , the largest beef supplier to Japan , has been trying to boost exports prior to the expiry of a four - year beef accord next March 31 . Imports of U . S . Corn have fallen due to increased sales from China and South America , while Japanese soybean imports from Brazil are expected to rise sharply this year , although the U . S . Will remain the largest supplier

WHEAT BY CLASS BREAKDOWN The U . S . Agriculture Department gave the 1986 / 87 breakdown of supply and distribution for wheats by classes , in mln bushels , with comparisons , as follows . HARD WINTER -- 1986 / 87 1985 / 86 04 / 09 / 87 03 / 09 / 87 04 / 09 / 87 03 / 09 / 87 Start Stocks 1 , 009 1 , 009 717 717 Production 1 , 018 1 , 018 1 , 230 1 , 230 Ttl Supply - X 2 , 027 2 , 027 1 , 947 1 , 947 Domestic Use 599 579 543 543 Exports 450 475 395 395 Total Use 1 , 049 1 , 054 938 938 End Stocks 978 973 1 , 009 1 , 009 Note - Season begins June 1 . X - Includes imports HARD SPRING -- 1986 / 87 1985 / 86 04 / 09 / 87 03 / 09 / 87 04 / 09 / 87 03 / 09 / 87 Start Stocks 498 498 371 371 Production 451 451 460 460 Ttl Supply - X 956 956 838 838 Domestic Use 218 192 174 174 Exports 200 190 166 166 Total Use 418 382 340 340 End Stocks 538 574 498 498 Note - Season begins June 1 . X - Includes imports . SOFT RED -- 1986 / 87 1985 / 86 04 / 09 / 87 03 / 09 / 87 04 / 09 / 87 03 / 09 / 87 Start Stocks 79 79 64 64 Production 290 290 368 368 Ttl Supply - X 369 369 432 432 Domestic Use 181 193 204 204 Exports 120 120 149 149 Total Use 301 313 353 353 End Stocks 68 56 79 79 Note - Season begins June 1 . X - Includes imports WHITE -- 1986 / 87 1985 / 86 04 / 09 / 87 03 / 09 / 87 04 / 09 / 87 03 / 09 / 87 Start Stocks 198 198 173 173 Production 232 232 254 254

SAUDI RATES RISE AS BAHRAIN BANKS CAUGHT SHORT Saudi riyal interest rates rose as Bahrain - based banks scrambled to cover short positions , dealers said . Several Bahrain banks had been lending in the fixed periods and borrowing in the short dates , but today they found the day - to - day money in short supply , dealers said . " Everybody ' s stuck in the spot - next zulchzulu one trader said . Spot - next rose to as high as 6 - 1 / 4 , six pct from 5 - 1 / 4 , five pct yesterday , and the borrowing interest spilled over into the periods , with one month rising to around 6 - 3 / 16 , 5 - 15 / 16 pct from 5 - 15 / 16 , 7 / 8 pct yesterday . Three months edged up to around 6 - 9 / 16 , 5 / 16 pct from 6 - 7 / 16 , 1 / 4 pct , while six months was quoted a touch firmer by some banks at seven , 6 - 3 / 4 pct . Commercial banks quoted the spot riyal at 3 . 7500 / 04 to the dollar after 3 . 7507 / 09 yesterday .

J . P . MORGAN & lt ; JPM > SAYS DLR MAY PREVENT FED EASING The relatively high level of real U . S . interest rates suggests that there is scope for further declines in money market rates , but the Federal Reserve is unlikely to promote such a drop as long as the dollar remains volatile , said J . P . Morgan and Co Inc chairman Lewis Preston . He said in response to a reporter ' s question after the bank ' s annual meeting that money market rates could decline further but , " I don ' t think the Fed is going to encourage that as long as the exchange markets are as volatile as they are zulchzulu On the other hand , he said that , barring a collapse of the dollar , he did not see rates going much higher . He said that Morgan ' s recent rise in its prime lending rate was " purely a reflection of an increase in a whole spectrum of rates zulchzulu Preston reiterated earlier company forecasts that the U . S . economy should show roughly 2 . 5 to three pct real growth this year . He also said that as a consequence of the dollar ' s decline and oil price rises , inflation would rise " moderately " to a 3 . 5 to four pct rate in 1987 .

U . S . SENATE TEAM WANTS MULTINATIONAL GULF FORCE The leaders of a U . S . Senate team probing American defense strategy in the MidEast Gulf said they favored a multinational force to keep oil flowing through the waterway . Sen . John Glenn and John Warner , in Kuwait as part of a Gulf Arab tour , said at a news conference that top officials in the area appeared ready to discuss extra facilities needed if the U . S . upgraded its defense role . The Senate team next heads for the United Arab Emirates , their last stop on a fact - finding mission prompted by Reagan administration plans to let half of Kuwait ' s 22 - tanker fleet fly the U . S . flag . Glenn and Warner said the U . S zulchzulu Britain and France , should explore the possibility of a unified Gulf force . " The American ships , the British ships , the French ships now talk to each other and all we ' ve got to do is formalize this arrangement zulchzulu Warner said . Glenn said a multinational force could be effectively deployed within 24 hours of a decision . Glenn voiced a preference for a United Nations multinational force , or failing that , an American , British , French force with cooperation from the Gulf Arab states . Warner voiced concern that the Soviet Union might use the situation in the Gulf to raise its presence . " And , unequivocally , all GCC states we have talked with , have said that would not be in the interests of the Arabian peninsula zulchzulu

LAWSON SAYS LOUVRE CURRENCY ACCORD SATISFACTORY The Louvre agreement by the Group of Seven finance ministers and central bankers to stabilise currencies has worked well and needs no fundamental strengthening at the economic summit in Venice on June 8 - 10 , U . K . Chancellor of the Exchequer Nigel Lawson said . Previewing the summit , which he expected would not produce any major new economic initiatives , Lawson told reporters work remained to be done on improving the conditions for lasting world economic growth . zulchzulu measures to boost growth , he said . " I think it is possible that there may be scope for a further reduction in interest rates in Germany zulchzulu he added , but stressed that he had had no indication that such a move was likely . He made no mention of Japanese interest rates . Lawson said the U . S . Should embark on " a gradual reduction of its fiscal deficits over the next two or three years zulchzulu He said the February 22 Louvre accord had produced " satisfactory exchange rate stability zulchzulu in part thanks to heavy coordinated intervention of Group of Seven central banks , and he was " content " with sterling ' s exchange rate . Pointing to the record 4 . 8 billion stg rise in U . K . May currency reserves announced today he said , " we have been playing a very full part ourselves ... We have been intervening to a very much greater extent than we had done hitherto zulchzulu Lawson said there was a risk that the Louvre agreement may falter if member states did not implement the macro - economic commitments underlying the accord . " Certainly it would be more difficult to maintain exchange rate stability if countries are seen not to implement their commitments in Paris ... In this respect zulchzulu He said the U . S . Budget deficit was " very important zulchzulu Noting the 6 , 000 billion yen economic package announced by Japanese Prime Minister Yasuhiro Nakasone last week

zulchzulu WARNS AGAINST FURTHER DOLLAR FALL Bundesbank President Karl Otto Poehl said a weaker dollar would be risky and a further appreciation of the mark would damage prospects for sustained West German economic growth . In a speech to the Institute of Contempory German Affairs here , Poehl said " It would be an extremely risky policy to aim for a further substantial decline in the value of the dollar to correct the trade deficit zulchzulu He said the United States could face a vicious circle of depreciation , inflation and more depreciation if it took that route . Poehl noted West Germany had already taken steps to meet U . S . Demands for greater stimulation of its domestic economy , accelerating tax cuts , cutting interest rates and tolerating above - target money supply growth . He said he would have been happy to have brought forward five billion marks of tax cuts now planned for January 1988 to the beginning of this year , but he said the government faced political constraints getting such measures through the upper house of the West German parliament . But there were also limits to the impact West Germany could accept on exports from a rising mark , he said . Poehl said West Germany relied on exports for about one - third of its gross national product , so a substantial erosion of export markets could not be offset by increasing demand at home . " A further appreciation of the mark could even be an obstacle to further growth zulchzulu he said . Poehl said the Bundesbank had tolerated rapid money supply growth last year because the country enjoyed low inflation and because external factors , including low oil prices and favourable terms of trade , had given some extra leeway . But Poehl said West Germany now faced a difficult dilemma over monetary policy . The underlying rate of inflation was now two pct , not the reported negative inflation rates last year , and West Germany was affected more than before by exchange rate developments . "

U . S . TAKES TOUGH STAND ON GATT FARM ISSUES The United States is prepared to " pull out all the stops " to defend its agricultural trade rights under the General Agreement on Tariffs and Trade ( GATT zulchzulu U . S . Ambassador to GATT Michael Samuels said . Those rights are now being challenged by the European Community ' s ( EC ) agricultural support policies , he told a conference sponsored by the American Soybean Association . He reiterated Washington ' s firm intention to retaliate if the EC goes ahead and bans imports of hormone - fed beef without the issue being investigated by a GATT special committee . The U . S . claims the EC directive , due to come into effect on January 1 , threatens to cut 100 mln dlrs worth of U . S . meat shipments into the EC . The U . S . also will oppose all EC efforts to impair U . S . trade via the EC oilseeds regime , which supports EC oilseed prices over the current market level and which may be extended to include a hotly disputed oils and fats tax , Samuels said . Reduction of trade - distorting world agricultural subsidies , an aim of most key participants in GATT multilateral trade negotiations , " is meaningless if import barriers continue to be erected zulchzulu Samuels said . Samuels called the U . S . plan to eliminate world farm subsidies by the year 2000 , proposed at GATT in July , " visionary " and " very serious zulchzulu The EC and Japan have said it is unrealistic . The EC Commission this month announced its draft proposal on farm trade reform , expected to be tabled at GATT formally next week . The EC scheme involves emergency measures to reduce tensions in troubled surplus sectors of cereals and cereals substitutes , dairy and sugar . It also calls for reduction of farm subsidies . The U . S . Is not opposed to short - term measures

CURRENCY MOVES MAY BE HURTING WORLD TRADE Japanese trade figures are seriously challenging the entrenched view of policy makers of the Group of Seven industrialised nations that relative currency rates are the key to smoothing world trade problems . Senior Japanese , U . S . And European officials in Tokyo say they are at a loss to fully explain the data , for if currencies are the key they ask , why then are are U . S . Exports to Japan shrinking ? What if manipulating currencies and driving the dollar down made world trade problems worse rather than solving them , fulfilling Federal Reserve chairman Paul Volcker ' s forecast of world trade recession ? U . S zulchzulu Japan trade has declined even after a 40 pct dollar fall against the yen since the September 1985 Group of Five pact in New York . The lower dollar ought to have made U . S . Exports 40 pct more competitive in Japan . The officials , most of them economists , can offer no objective reason why they are not . Worse , how are European Community sales to Japan rising rapidly when the European Currency Unit has until now declined only 11 pct against the yen zulchzulu Last week ' s G - 7 meeting in Washington has been widely interpreted as a sign from the policy makers that the dollar must go lower . So worst of all , what if Volcker is correct ? At a loss to give an objective explanation , officials can only offer explanations which tend to be highly subjective . " I don ' t know and I don ' t think anyone knows zulchzulu said Hugh Richardson , acting head of the EC delegation in Tokyo . " What I do know is that Community exporters are making a hell of an effort in this market . If you make an effort , there is money to be made in Japan zulchzulu he added . But U . S . Officials and businessmen are convinced low U

UAE CENTRAL BANK CD YIELDS UNCHANGED Yields on certificates of deposit ( CDs ) issued today by the United Arab Emirates central bank were unchanged from those on last Monday ' s offer , the bank said . The one month yield was set at last week ' s 6 - 3 / 4 pct , while two and three month CDs also remained unchanged at 6 - 13 / 16 pct . The six month yield was set at seven pct .

U . S . DOLLAR LOSSES PROPEL BROAD COMMODITY GAINS Commodities from gold to grains to cotton posted solid gains in a flurry of buying today as losses in the U . S . dollar and rising interest rates kindled fears of inflation and economic instability . Gains were most pronounced on the Commodity Exchange in New York , where gold jumped 12 . 40 dlrs and closed at 436 . 50 dlrs a troy ounce , and silver 22 . 5 cents to 6 . 86 dlrs a troy ounce . A key factor behind the advance was anticipation that inflation will be the only way for the major industrial nations to halt the slide in the value of the U . S . dollar , said Steve zulchzulu , director of commodity research with Smith Barney , Harris Upham and Co zulchzulu in New York . The dollar tumbled one day after top finance officials from the seven largest industrial nations reaffirmed their commitment to support its value , and despite reports of intervention by the U . S . Federal Reserve Bank , traders said . Traders said it appears that the industrial nations , known as the Group of Seven , lack the ability to change the long - term direction of the currency markets . " Maybe they have some ideas or plans zulchzulu said zulchzulu . " If they do , it ' s not evident zulchzulu " It looks like there ' s no cure but to let the free market take values to where they should be . " One way or another , we will force our major trading partners to stimulate their economies zulchzulu as a measure to correct the mounting U . S . trade deficit , zulchzulu said . " I think the markets believe , and have believed for a long time , that the only recourse is to reflate at some point . It ' s going to be a long and tedious process , but that ' s what ' s happening zulchzulu he said

TAIWAN CURBS zulchzulu OF FOREIGN EXCHANGE Taiwan ' s central bank announced that as from today the overseas foreign exchange borrowings of local and foreign banks would be frozen at the level they reached at the end of May . The central bank ' s statement added that the measure would be effective until the end of July . Bankers said the measure is designed to curb the inflow of foreign exchange and slow the growth of money supply . They added that the move , which sparked a record single day plunge of the local stock market , would limit their ability to lend foreign exchange to importers and exporters . Foreign exchange borrowings by local and foreign banks reached almost 12 billion U . S . Dlrs by the end of April , according to official statistics . Last week the central bank said that from today it would reduce its purchase of forward U . S . Dollars from banks to 40 pct from 90 pct of the value of the contract . It said the move was needed because of " distortions " in the foreign exchange market . Exporters , nervous about the appreciating Taiwan dollar , have been heavily selling forward U . S . Dollars on the interbank market to avoid exchange rate losses . Official figures show that forward U . S . Dollar sales in May reached a record of almost six billion U . S . Dlrs against 5 . 9 billion in April . All Taiwan ' s foreign exchange earnings must be converted into local dollars , boosting money supply at a time of booming exports . Money supply rose a seasonally adjusted 51 . 86 pct in the year to end - April , raising fears of higher inflation . In March the central bank clamped tight restrictions on remittances of foreign exchange by companies and individuals to Taiwan in a move to curb inflows of speculative money . Economists and bankers estimate that the rising value of the local dollar has attracted about ten billion U

SENATOR URGES ACTION TO STABILIZE STOCK MARKETS Sen . John Heinz , R - Pa , urged the Administration to take steps to reduce volatility in the financial markets , including suspending program trading and limiting daily trading on stock index futures . Heinz said margin requirements for index futures , now six pct , should be the same as for common stock and equities . He urged creation of a task force to be headed by former Federal Reserve chairman Paul Volcker to coordinate international credit and zulchzulu policies among major nations and stabilize interest rates at the lowest possible levels .

FED EXPECTED TO SET CUSTOMER zulchzulu The Federal Reserve is expected to intervene in the government securities market to supply temporary reserves indirectly via customer repurchase agreements , economists said . Economists expect the Fed to execute 2 . 0 - 2 . 5 billion dlrs of customer repos to offset pressures from the end of the two - week bank reserve maintenance period today . Some also look for a permanent reserve injection to offset seasonal pressures via an outright purchase of bills or coupons this afternoon . The Federal funds rate opened at 6 - 3 / 8 pct and remained at that level , up from yesterday ' s 6 . 17 pct average .

FED ADDS RESERVES VIA OVERNIGHT zulchzulu The Federal Reserve entered the U . S . Government securities market to arrange overnight System repurchase agreements , a Fed spokesman said . Dealers said that Federal funds were trading at 6 - 3 / 8 pct when the Fed began its temporary and direct supply of reserves to the banking system .

REAGAN HINTS U . S . WANTS HELP IN zulchzulu GULF President Reagan said he would discuss the Mideast Gulf situation with allied leaders at next week ' s Venice economic summit and hinted he would seek their help in preserving free navigation . In a speech prepared for delivery as the United States made plans to protect 11 Kuwaiti oil tankers from Iranian attack , Reagan said the American people were aware that " it is not our interests alone that are being protected zulchzulu Saying that allied dependence on gulf oil was no secret , Reagan declared , " During the upcoming summit in Venice , we will be discussing the common security interests shared by the western democracies in the MIDEAST Gulf . " The future belongs to the brave . Free men should not cower before such challenges , and they should not expect to stand alone zulchzulu Reagan will meet the leaders of Britain , France , West Germany , Italy , Canada and Japan at the economic summit , which will take place in Venice June 8 - 10 . The 13th annual top - level meeting of the major industrial democracies will take place against a backdrop of rising congressional concern over Reagan ' s plan to protect gulf shipping and demands that the allies do more . These concerns were heightened by the May 17 Iraqi missile attack on the U . S . frigate Stark which killed 37 seamen . " They died while guarding a chokepoint of freedom , deterring aggression and reaffirming America ' s willingness to protect its vital interests zulchzulu Reagan said . In a pre - summit speech celebrating the 40th anniversary of the Marshall Plan , Reagan , who spoke to an audience of foreign affairs experts , also pledged to push for economic expansion by West Germany and Japan to bolster the world trading system . " While the vibrancy of the U . S . economy has contributed enormously to the world expansion , preserving a growing world economy is the business of

Balladur urges G - 7 to respect pledges on monetary policy in Louvre accord Balladur urges G - 7 to respect pledges on monetary policy in Louvre accord

JAPAN DETAILS PLAN TO STAVE OFF TRADE PROBLEMS Japan ' s Liberal Democratic Party ( LDP ) has drawn up a detailed plan calling for large tax cuts and an increase in government purchases of foreign goods , the head of the committee working out the plan , Junichiro Koizumi , said . The plan will also urge the government to double 1985 ' s official development assistance to 7 . 6 billion dlrs within five years instead of seven as the government had promised , senior LDP officials said at a press conference . LDP executive council chairman Shintaro Abe will explain the plan to U . S . Officials when he visits the U . S . On April 19 . Abe ' s visit is to prepare for Prime Minister Yasuhiro Nakasone ' s talks with President Ronald Reagan later this month . Koizumi said the LDP plan will not specify the size of the tax cut or the amount of domestic demand to be stimulated . However , top LDP executives will work out figures so that Abe will be able to offer specifics to U . S . Officials . The proposed increase in procurement of foreign goods by the government will probably include the purchase of super computers , LDP officials said . According to the plan , Japan will also strive to solve specific trade problems with other nations and will encourage flows of funds to developing countries , the officials said . The LDP expects the measures to prop up the economy and lessen trade problems with the U . S zulchzulu They added . The basic ideas of the LDP ' s plan were presented to and welcomed by monetary authorities of the major industrial nations in Washington last week , they said . The LDP plan will form the basis for the last of several packages to stimulate Japanese domestic demand and will be unveiled by the government in late May .

U . K . CENTRAL BANK WARNS OF EXCESSIVE RATE CUTS Bank of England governor Robin Leigh - Pemberton said lowering interest rates too fast could jeopardise recent economic achievements in the U . K . In remarks prepared for delivery to businessmen in Birmingham , he said prospective returns on real investment are more favourable , relative to those on financial assets , than for a good number of years . " It would surely be foolish to put that favourable conjuncture at risk by lowering interest rates prematurely or excessively zulchzulu he said . " We might enjoy a short - term boost to activity , but at the risk of a damaging return to the uncertainty and acrimony of high inflation zulchzulu he added . Leigh - Pemberton said he recognised there are some who would argue that interest rates are still too high and deter investment in industry . " But we should not forget that less than a year ago we were intervening to support sterling and had some temporary difficulty in persuading the markets that a one pct increase in base rates , to 11 pct , was a sufficient tightening of policy at the time zulchzulu he added . Base rate is currently nine pct .

BANK OF FRANCE LEAVES INTERVENTION RATE UNCHANGED The Bank of France said it left its intervention rate unchanged at 7 - 3 / 4 pct when it injected funds in the market against first category paper in today ' s money market intervention tender . Money market dealers had earlier expressed mixed views on the possibility of quarter point cut . The rate was last adjusted on March 9 , when it was cut to 7 - 3 / 4 pct from the eight pct rate set in January .

U . S . ENERGY FUTURES CALLED UNCHANGED TO LOWER Traders expect U . S . energy futures will open unchanged to slightly lower this morning with support near yesterday ' s lows . Crude futures are called unchanged to five cts weaker tracking unchanged domestic crudes and North Sea Brent crude , which traded at 18 . 01 dlrs a barrel today , about ten cts below yesterday ' s New York close . Traders said the supply squeeze in 15 - day forward April Brent appears to have ended . Product futures , which fell sharply yesterday , are due to open unchanged to 0 . 25 cent lower , traders said . Traders expect some followthrough selling in products but said gasoil futures in London will probably lend some support since they are trading as expected . May gasoil futures were off 1 . 50 dlrs a tonne this morning while June was down 1 . 25 dlrs in thin conditions .

SENATE BACKS U . S . RETALIATION IN GULF The U . S . Senate on Tuesday backed President Reagan ' s retaliatory strike against Iranian targets in the Gulf as it moved to take a greater role in making policy in the volatile region . Senators voted 92 - 1 for a non - binding measure that endorsed Monday ' s U . S . attack on two Iranian oil platforms in retaliation for an Iranian attack last Friday on a Kuwaiti ship flying the American flag . The measure said the attack was a firm indication of U . S . resolve that Iran " cannot take military action against the United States with impunity zulchzulu Earlier , the Senate cut off Republican stalling tactics and set a vote on a measure that could give Congress a larger role in making Gulf policy . The measure , however , does not require Reagan to comply with the 1973 War Powers Act , which could lead to a pullout of U . S . forces from the Gulf . While Democrats and Republicans praised the U . S . retaliatory strike , many voiced new fears about the growing U . S . involvement in the Gulf and some demanded that Reagan comply with the War Powers Act .

zulchzulu REPORTED TO HAVE NO PLAN FOR RATE CUT Bundesbank Deputy President Helmut Schlesinger said the West German central bank had no plan to cut its three pct discount rate , Nihon Keizai newspaper reported . The financial daily quoted Schlesinger as saying in an interview that the bank would try to maintain current interest rate levels for the time being . He also told the newspaper he saw no need for large - scale intervention in the foreign exchange market because exchange rates are stable . Earlier , Schlesinger told a press conference that the Bundesbank would continue its policy of maintaining short - term interest rates at a low level for currency stability . He also said he was satisfied with the current dollar / mark exchange rate but added that he was not certain if it was ideal for the West German economy .

JAPAN FARM REFORM A KEY TO TRIMMING TRADE SURPLUS Basic reform of Japan ' s protected farm sector is a key to shifting its economy away from export to domestic - led growth , a vital step if it is to trim its trade surplus , securities analysts said . The farm sector , which is protected by import tariffs and quotas , propped up by subsidies and price supports , and sheltered by the tax system , has ample room for change , they said . " In economic terms , reform would be a plus zulchzulu said Christopher Chew of brokerage firm James Capel and Co . The ultimate cost of the existing system is food prices twice those in Europe and two to three times those in the U . S zulchzulu The analysts said . Spending on food accounts for about one quarter of the average household ' s budget and roughly 10 pct of the gross national product ( GNP zulchzulu according to a study by Chew . Reducing these prices could increase household spending power by five pct , his study said . The money could be spent on products which would have a more direct impact in boosting domestic growth , it added . " There ' s a lot of slack zulchzulu a U . S . Government official in Tokyo said . " All that money could be spent on something else zulchzulu Direct central government subsidies to the farm sector amount to some five billion dlrs per year . Independent estimates put total subsidies from all sources as high as 37 billion and the analysts said much of that money is wasted . Changing tax laws to encourage city residents who only farm on weekends to put their land up for sale for residential development would also give a boost to domestic spending , economists said . " Housing construction is the key strategic variable in the expansion of domestic demand zulchzulu wrote Chihiro Nakajima , professor at Kyoto Gakuen University . Japanese business groups are calling for staged farm

JAPAN DETAILS PLAN TO STAVE OFF TRADE PROBLEMS Japan ' s Liberal Democratic Party ( LDP ) has drawn up a detailed plan calling for large tax cuts and an increase in government purchases of foreign goods , the head of the committee working out the plan , Junichiro Koizumi , said . The plan will also urge the government to double 1985 ' s official development assistance to 7 . 6 billion dlrs within five years instead of seven as the government had promised , senior LDP officials said at a press conference . LDP executive council chairman Shintaro Abe will explain the plan to U . S . Officials when he visits the U . S . On April 19 . Abe ' s visit is to prepare for Prime Minister Yasuhiro Nakasone ' s talks with President Ronald Reagan later this month . Koizumi said the LDP plan will not specify the size of the tax cut or the amount of domestic demand to be stimulated . However , top LDP executives will work out figures so that Abe will be able to offer specifics to U . S . Officials . The proposed increase in procurement of foreign goods by the government will probably include the purchase of super computers , LDP officials said . specific trade problems with other nations and will encourage flows of funds to developing countries , the officials said . The LDP expects the measures to prop up the economy and lessen trade problems with the U . S zulchzulu They added . The basic ideas of the LDP ' s plan were presented to and welcomed by monetary authorities of the major industrial nations in Washington last week , they said . The LDP plan will form the basis for the last of several packages to stimulate Japanese domestic demand and will be unveiled by the government in late May .

CANADA BANK RATE RISES TO 8 . 59 PCT Canada ' s bank rate rose marginally to 8 . 59 pct from 8 . 58 pct last week , Bank of Canada said . The bank rate is set one - quarter percentage point above the average yield on the weekly issue of 91 - day treasury bills . This week ' s yield was 8 . 34 pct , compared with the previous week ' s 8 . 33 pct . Tenders were accepted for 2 . 20 billion dlrs of 91 - day bills at an average price of 97 . 963 dlrs against 97 . 965 dlrs last week . The 1 . 20 billion dlrs of 182 - day bills were priced at an average 95 . 852 dlrs against 95 . 779 dlrs last week , to yield an average 8 . 68 pct against 8 . 84 pct last week . The 500 mln dlrs of 364 - day bills were priced at an average 91 . 712 dlrs against 91 . 529 dlrs last week , to yield an average 9 . 06 pct against 9 . 28 pct last week . Tenders will be received next week for 2 . 20 billion dlrs of 91 - day bills , 1 . 20 billion dlrs of 182 - day bills and 500 mln dlrs of 364 - day bills .

FED EXPECTED TO SET THREE - DAY REPURCHASE PACTS The Federal Reserve is expected to enter the U . S . Government securities market to add temporary reserves directly by arranging three - day System repurchase agreements , economists said . They said the Fed may add the reserves indirectly instead via a large round , two billion dlrs or more , of customer repurchase agreements . Federal funds , which averaged a high 6 . 35 pct on Friday , opened at 6 - 7 / 16 pct and traded between there and 6 - 1 / 2 pct .

G - 7 SEEN FIGHTING TO KEEP CURRENCY PACT International monetary officials will rush to paper over the deep cracks that have appeared in the Louvre accord on currency stability to prevent a dollar free - fall and to calm turmoil in world capital markets , economists and currency traders said . " I don ' t think the Louvre is dead because if it breaks up in an acrimonious way , the potential outcome is a rout of the dollar , higher interest rates and collapsing stock markets . It ' s in the Group of Seven ' s interest to calm things down zulchzulu said Douglas Madison , corporate trader at BankAmerica Corp . In a weekend television interview , U . S . Treasury secretary James Baker sharply criticised a recent rise in West German money market rates and said the eight month - old Louvre pact to foster exchange rate stability needs to be reviewed . His comments rocked the currency markets and helped send the already - fragile U . S . and overseas stock markets into a tailspin . The dollar lost more than two pfennigs in the U . S . to about 1 . 7740 / 50 marks and about one yen to 141 . 25 / 35 yen . The Dow Jones Industrial Average slumped more than 200 points at one stage and U . S . Treasury bonds dropped about 1 - 3 / 4 points .

PAKISTAN UNVEILS NEW TRADE POLICY TO BOOST EXPORTS Pakistani government allowed freer cotton and rice export in a three - year new trade policy aimed at narrowing the country ' s yawning trade gap . Commerce and Planning Minister Mahbubul Haq said in a televised speech the government had also decided to allow duty - free import of cotton yarn to make the textile industry more competitive , and to link bulk tea imports to the export of Pakistani products . Cotton and rice are Pakistan ' s main exports , which have been handled exclusively by state corporations since early 1970s . But Haq said now the private sector would also export cotton and rice along with the corporations , which meets a long - standing demand of the local traders . The duty - free import of cotton yarn has been allowed to bring down prices and help the local ancillary industries compete effectively in the world market , he said . Haq said the new policy , effective from the fiscal year 1987 / 88 beginning on July 1 , would be for three years but reviewed every year . It was a departure from the previous practice of announcing trade policies for a single fiscal year , and Haq said it would enable the businessmen to plan their market strategies over a longer period . He said an export credit of 250 mln dlrs had been provided for the export of engineering goods to selected third world countries on soft credit terms . Pakistan ' s 1986 / 87 exports at 3 . 6 billion dlrs , 18 . 2 per cent more than in the previous year , and imports at 5 . 23 billion dlrs compared to 5 . 63 billion dlrs in 1985 / 86 . He said the government policy was to rationalise and streamline import controls . " It has been observed that due to restrictions on imports , specially on raw materials and intermediate goods , local industry has been suffering for want of necessary inputs zulchzulu he said .

DEFICIT CUTS SEEN UNABLE TO CURE TRADE DEFICIT Financial analysts say they are pleased with congressional moves to trim next year ' s federal budget deficit but believe the actions will do little to help improve the U . S . trade deficit or buoy the economy . The House of Representatives is expected to vote tomorrow to approve a trillion - dollar budget blueprint for the coming fiscal year that reduces the deficit by 38 billion dlrs . Similarly , the Senate Budget Committee has approved a plan that would cut federal red ink by about 37 billion dlrs next year . " In terms of the economy , 37 - 38 billion dlrs is infinitesimal , so cuts of this magnitude will have little impact on the economy and the trade deficit zulchzulu said Stanley Collander , a Touche Ross federal budget policy analyst . " At best , it will have a small positive effect zulchzulu Collander said in an interview . Federal Reserve Board Chairman Paul Volcker has repeatedly told Congress that cutting federal red ink would go a long way to help reduce the massive trade deficit and also help ease some of the downward pressure on the value of the dollar . The U . S . government has attempted to remedy the trade imbalance by driving down the value of the dollar . But Volcker has warned that a further fall in the dollar ' s value is fraught with danger . Such a decline , he has said , could refuel inflation as imported goods become more expensive and chase away foreign capital needed to finance the federal budget deficit . In addition , in February , U . S . officials meeting with other major industrialized nations in Paris agreed that the value of the dollar had dropped enough and that world exchange rates should be stabilized at around current levels . As part of that agreement , Japan and West Germany agreed to take steps to stimulate their economies and the United States agreed to cut its budget deficit .

TAIWAN ANNOUNCES NEW ROUND OF IMPORT TARIFF CUTS Taiwan announced plans for another round of import tariff cuts on 862 foreign goods shortly before trade talks with Washington which officials described as a move to help balance trade with the United States . Wang Der - Hwa , Deputy Director of the Finance Ministry ' s Customs Administration Department , told reporters the list of products included 60 items asked by Washington . " The move is part of our government efforts to encourage imports from our trading partners , particularly from the United States zulchzulu he said . He said the ministry sent a proposal today to the cabinet that the tariffs on such products as cosmetics , bicycles , apples , radios , garments , soybeans and television sets be cut by between five and 50 pct . The cabinet was expected to give its approval next Thursday and the new tariff cuts would be implemented possibly starting on April 20 , he added . Taiwan introduced a sweeping tariff cut on some 1 , 700 foreign products last January aimed at helping reduce its growing trade surplus with the United States , the island ' s largest trading partner . Washington however was not satisfied with the cuts and pressed for more reductions as a way of cutting its huge trade deficit with Taipei . Washington ' s deficit with Taipei rose to a record 13 . 6 billion U . S . Dlrs last year from 10 . 2 billion in 1985 . It widened to 3 . 61 billion in the first quarter of 1987 from 2 . 78 billion a year earlier , Taiwan ' s official figures show . Today ' s announcement came before a departure later today of a 15 - member Taiwan delegation for Washington for a series of trade talks with U . S . Officials . The delegation ' s leader , Vincent Siew , told reporters last night he was leaving with " a heavy heart zulchzulu meaning that he would face tough talks in Washington because

TAIWAN ANNOUNCES NEW ROUND OF IMPORT TARIFF CUTS Taiwan announced plans for another round of import tariff cuts on 862 foreign goods shortly before trade talks with Washington which officials described as a move to help balance trade with the United States . Wang Der - Hwa , Deputy Director of the Finance Ministry ' s Customs Administration Department , told reporters the list of products included 60 items asked by Washington . " The move is part of our government efforts to encourage imports from our trading partners , particularly from the United States zulchzulu he said . He said the ministry sent a proposal today to the cabinet that the tariffs on such products as cosmetics , bicycles , apples , radios , garments , soybeans and television sets be cut by between five and 50 pct . The cabinet was expected to give its approval next Thursday and the new tariff cuts would be implemented possibly starting on April 20 , he added . Taiwan introduced a sweeping tariff cut on some 1 , 700 foreign products last January aimed at helping reduce its growing trade surplus with the United States , the island ' s largest trading partner . Washington however was not satisfied with the cuts and pressed for more reductions as a way of cutting its huge trade deficit with Taipei . Washington ' s deficit with Taipei rose to a record 13 . 6 billion U . S . Dlrs last year from 10 . 2 billion in 1985 . It widened to 3 . 61 billion in the first quarter of 1987 from 2 . 78 billion a year earlier , Taiwan ' s official figures show . Today ' s announcement came before a departure later today of a 15 - member Taiwan delegation for Washington for a series of trade talks with U . S . Officials . The delegation ' s leader , Vincent Siew , told reporters last night he was leaving with " a heavy heart zulchzulu meaning that he would face tough talks in Washington because

CANADA TO MONITOR STEEL IMPORTS , EXPORTS Canada plans to monitor steel shipments flowing in and out of the country in an attempt to appease concerns in the U . S . over the high level of Canadian steel exports , Trade Minister Pat Carney said . " To help maintain our open access to the U . S . steel market , the government is taking further action to ensure we have more accurate data on exports and imports and that Canada is not used as a backdoor to the U . S . market by offshore suppliers zulchzulu Carney said . Carney also said Canadian companies were being asked to exercise prudence in the U . S . market and both countries were considering establishing a joint commission to study the growing steel problem . Carney told the House of Commons she will soon announce an amendment to the Exports and Imports Permits Act to set up the monitoring program . Canadian steel shipments to the U . S . have risen to 5 . 7 pct cent of the U . S . market in recent months , almost double the level just two years ago , Canadian trade officials said . The increase in Canadian shipments comes at a time of growing anger in the U . S . over rising steel imports from several countries in the face of a decline in the domestic steel industry . Some U . S . lawmakers have proposed Canada ' s share of the American market be limited to 2 . 4 pct .

U . S . SENATE LIFTS SOME BANS ON NATURAL GAS The Senate unanimously approved legislation to lift a ban on new construction of natural gas - fired power plants and other large industrial gas - burning plants . The bill , sponsored by Senate Energy Committee chairman Bennett Johnston , also repeals mandatory incremental pricing of natural gas which was designed to protect residential consumers from major price increases by forcing some industrial users to pay higher than market prices . " This legislation will open up new natural gas markets zulchzulu the Lousiana Democrat said . The gas restrictions were enacted in 1978 in response to a shortage of natural gas and predictions of higher prices . " Now both oil and gas prices are severely depressed zulchzulu Johnston said . In a compromise with coal producers , the bill requires new baseload electric powerplants be designed to accomodate modifications necessary to burning coal or another alternate fuel .

GATT CASE AGAINST JAPAN A MODEL FOR U . S . - zulchzulu Agriculture Secretary Richard Lyng said the ruling of a GATT panel on a U . S . trade complaint against Japan , expected soon , may influence the U . S . stance in negotiations with Tokyo on beef and citrus import quotas . The ruling of a GATT tribunal on a U . S . demand that Japan end quotas on 12 categories of food items is expected by the end of the year . Lyng said he is optimistic the ruling will favor the U . S . " These are quota items , and the principles that apply to them , it seems to me , will have some bearing on the question of whether you would have quotas or not on beef and citrus zulchzulu Lyng told Reuters in an interview . He repeated the U . S . demand that Japan lift the quotas on beef and citrus after March 31 , next year . The Japanese quotas on 12 food categories which the United States has challenged include items such as tomato paste , some cheeses and specialty fruit juices . U . S . officials had hoped a ruling against the quotas would be issued earlier this year but the GATT panel decision has been delayed by the illness of the tribunal ' s chairman . The U . S . has taken a hardline stance on the beef and citrus quotas , which Tokyo says must remain in place to protect Japanese farmers . " We will not negotiate new quotas or accept new quotas ( on beef and citrus zulchzulu If they impose them we would consider that an illegal action in the GATT , Lyng said . He declined to say what action the U . S . would take next April if Japan continues to resist U . S . demands .

FED EXPECTED TO ADD RESERVES VIA CUSTOMER RPS The Federal Reserve is expected to enter the government securities market to add reserves via customer repurchase agreements , economists said . They expected the amount to total around 1 . 5 billion to two billion dlrs . Economists added that the low rate on federal funds indicates the Fed is unlikely to add funds agressively through overnight system repurchases , unless it feels the need to calm volatile financial markets . Federal funds were trading at 7 - 1 / 8 pct , down from yesterday ' s average of 7 . 61 pct .

WEST GERMANY STILL COMMITTED TO LOUVRE ACCORD West German government sources said Bonn remained committed to the Louvre Accord to stabilise currencies , which was struck by leading western democracies in Paris last February . Over the weekend , U . S . Treasury Secretary James Baker criticised recent rises in West German short - term interest rates and said such developments were not in the spirit of the Louvre pact . He said the agreement may have to be re - examined . The sources said the West German interest rate rises had to be seen in the context of interest rate developments worldwide .

VENEZUELA LOWERS EXCHANGE RATE FOR OIL EARNINGS Venezuela ' s cabinet approved a new exchange rate for oil and mining export earnings , setting it at 14 . 50 bolivars to the dollar from 7 . 50 bolivars previously , Minister Manuel zulchzulu UA said . zulchzulu told reporters after a cabinet meeting that the measure is " fundamental to conserving the economic and financial strength of the petroleum industry zulchzulu He said the new exchange rate , which goes before the central bank for final approval tommorrow , will allow the state oil company Petroleos De Venezuela , S . A zulchzulu PDVSA ) to solve its problem of working capital and implement investment plans , estimated at 20 billion bolivars for 1987 . He did not say when the measure would become effective . Venezuela ' s oil industry previously sold its dollar earnings to the government at 7 . 50 to the dollar but bought foreign exchange from its imports at 14 . 50 bolivars . The new exchange rate will promote purchases of domestic goods and services by the industry , zulchzulu said . He added that it would also put PDVSA in a position to purchase more government debt bonds . PDVSA had available liquid assets of 20 billion bolivars at the start of this year , of which nine billion were in a trust fund in the Central Bank of Venezuela ( BCV ) and placed in government bonds . According to a contract between PDVSA and the central bank , the BCV must provide cash as the oil industry requries by repurchasing the bonds . PDVSA ' s contribution to the treasury last year was 44 . 480 billion bolivars . It foreign earnings for oil and zulchzulu sales were 8 . 023 billion dlrs .

PAPER SAYS U . S . TRADE DEFICIT CUT TO 13 . 65 BILLION The Washington Post said the U . S . Commerce Department yesterday issued a new report showing that the U . S . Merchandise trade deficit was 13 . 65 billion dollars in February , a reduction of 1 . 4 billion dlrs from the 15 . 06 billion figure the department reported only two days earlier . The newspaper said : " News of the unexpectedly large 15 billion deficit helped batter the dollar ' s value on foreign exchange markets and boosted U . S . Interest rates . " However , the new report went largely unnoticed by financial markets since such a downward revision in the deficit is a monthly occurrence zulchzulu The Washington Post said : " By law , the department must first publish what a top commerce official agreed are misleading trade figures and then wait 48 hours before putting out the more accurate ones zulchzulu No one was immediately available at the Commerce Department for comment on the Washington Post report .

TRADE ISSUES STRAINING EC ' S PATIENCE WITH JAPAN Member states of the European Community are starting to run out of patience with Japan which they believe has repeatedly promised major initiatives to open its market to imports , but as often made only minor moves . Diplomatic sources here said several recent actions by EC countries bear witness to a new disillusionment with the willingness , or at least the ability , of the Japanese government to reduce its massive trade surplus with the EC . However , they said an all - out trade war may be far off , as EC states know they would suffer almost as much as Japan . Senior EC diplomats gave a generally favourable reaction to an EC executive commission proposal under which the EC could raise tariffs on a range of Japanese products if the U . S . Carries out a threat to make a similar move on April 17 . The EC tariffs , which would involve renouncing obligations entered into with the world trade body GATT , would be designed to stop a diversion of exports to the EC market from that of the U . S . The diplomats were meeting as Tokyo announced that the EC ' s trade deficit with Japan reached a record 2 . 13 billion dlrs in March , up from 1 . 94 billion in February . In 1986 , Japanese exports to the EC totalled 30 . 67 billion dlrs , up 4 . 5 pct from 1985 , while EC exports to Japan fell one pct to 12 . 43 billion dlrs . In Paris , trade minister Michel Noir said France has decided to give Japan a taste of its own medicine . Burgeoning imports of microwave ovens and of frozen Coquilles St Jacques will be restricted by a strict application of French quality standards -- something EC states say often happens to their own exports entering Japan . Britain has threatened to withdraw the licences of Japanese banks and insurance companies to operate in the City of

BONN CONFIDENT OF MAINTAINING CURRENCY STABILITY U . S . Treasury Secretary James Baker met West German Finance Minister Gerhard Stoltenberg and Bundesbank President Karl Otto Poehl in Frankfurt on Monday , a Bonn Finance Ministry spokesman said . After the meeting the spokesman quoted Stoltenberg as saying he was confident that foreign currencies could be stabilised at around current levels . The meeting came after Baker criticised West Germany for increasing short - term money market interest rates . He had said the rise was not in line with the spirit of the Louvre accord aimed at stabilizing the U . S . dollar last February . The meeting had been arranged last week , the spokesman said . Baker , Stoltenberg and Poehl had agreed to pursue the policies agreed under the Louvre pact with reference to currency stability and monetary policy . Earlier on Monday the zulchzulu injected liquidity into the West German money market in a move which money market dealers interpreted as an attempt by the West German monetary authority to curb interest rate rises . The spokesman described Monday ' s talks , which he called private , as very positive .

EC LAUNCHES ANTI - DUMPING PROBE ON JAPANESE CHIPS The European Community launched an investigation into allegations of dumping by Japanese semiconductor makers in a move which diplomats said could mark an intensification of world trade strains . Tokyo already faces a deadline of April 17 from Washington for the imposition of 300 mln dlrs worth of tariffs on chips it imports into the U . S . The EC Executive Commission said today the European Electrical Component Manufacturers Association complained that Japanese firms were selling high capacity EPROM type ( erasable programmable read only memory ) chips at unfairly low prices . Japan last year took 78 pct of the 170 mln dlr EC EPROM market , up from 60 pct in 1984 . The EC firms said they had been forced to offer their products at a discount of up to 30 pct in order to compete with the Japanese . The Commission said it believed the Association had given sufficient elements of proof for dumping to warrant an investigation , which could lead it to impose duties if it found the complaints were justified . The Commission claims last year ' s accord between the U . S . And Japan on microchip pricing gives U . S . Firms privileged access to the Japanese market .

FDIC ' S SEIDMAN SAYS HIGHER RATES COULD HARM BANKS Federal Deposit Insurance Corp Chairman William Seidman said he would be concerned about the impact on banks of a further sharp rise in interest rates . However , Seidman , attending the American Bankers Association convention , said he did not expect rates to rise much higher and said the outlook for the U . S . economy and for banking was sound . " The potential for greater interest rate rises gives us concern . We see nothing right now in the outlook that causes us to believe rates are going much higher or that the economy is not sound zulchzulu Seidman told a news conference .

LATIN , CARIBBEAN NATIONS OPPOSE TRADE BILLS A group of Latin American and Caribbean nations formally opposed trade legislation pending in Congress , saying it would curb their exports , slow development and hinder its ability to repay foreign debt . Mario Rodriguez Montero , president of an Organization of American States special committee on trade , said he was aware of the large U . S . trade deficit , but added " the region should not be the one affected by the trade bills zulchzulu He said the causes of the deficit were the strong dollar and the budget deficit , and " it is regrettable to solve it by a trade bill that would only serve private U . S . interests zulchzulu Rodriguez made the comment at a news conference after two days of meetings with U . S . officials on trade bills now in Congress that are designed to reduce the U . S . trade deficit , which last year hit a record 166 . 3 billion dlrs . Congressional observers say the bills are aimed mainly at Japan , Taiwan , South Korea and a few other nations with large , annual trade surpluses with the United States . Mexico , Brazil and Venezuela are the only Latin nations with large trade surpluses last year with the United States , but even Mexico , with the largest , had a surplus of only 5 . 2 billion dlrs , against Japan ' s of 58 . 6 billion dlrs . The European Community has also opposed the bills . Rodriguez said the Latin and Caribbean nations backed the Reagan Administration ' s opposition to many of the sections in the legislation , including those to curb imports and to require retaliation for foreign unfair trade practices . He told reporters the committee would likely mount a campaign to fight the legislation when it comes up for debate on the Senate floor , expected next week . Rodriguez said " the region needs trade to continue development . We hope this need will

KUWAIT SEEN WANTING TO LEASE SOME U . S . TANKERS The United States said Kuwait was discussing plans to lease privately - owned U . S . tankers to transport oil through the Gulf in addition to putting some of its own vessels under American flags . State Department spokeswoman Phyllis Oakley , who made the disclosure about the tankers , also told reporters the United States expects to conclude very soon a favorable arrangement with Saudi Arabia concerning expanded security cooperation in the Gulf . The two developments occur as the Reagan administration continued to come under fire in Congress for its plans to bring 11 Kuwaiti tankers under American flags . The move is designed to protect the tankers from Iranian attacks and ensure freedom of navigation in the strategic waterway but has raised fears on Capitol Hill that it will draw the United States into the seven - year - old Iran - Iraq War . " The Kuwaitis have discussed the possibility of chartering U . S . flag vessels with the Maritime Administration zulchzulu Oakley said . She emphasized , however , that " if some charter arrangement could be worked out , it would not supplant the reflagging arrangement that we worked out with the Kuwaitis zulchzulu In both cases , the ships would be eligible for U . S . Navy escort in the Gulf , she said . The Washington Post today quoted John Gaughan , administrator of the Martime Administration , as saying Kuwait has approached an American shipping company about the possibility of a charter . Gaughan said that earlier this week he told representatives of the company , whose identify he did not know , that chartered vessels flying the U . S . flag " would be protected zulchzulu the newspaper reported . Concerning Saudi Arabia , Oakley said " we are moving forward in our talks ... on how we can tailor our efforts and security cooperation to facilitate our Gulf operations zulchzulu

FAO SEES LOWER GLOBAL WHEAT , GRAIN OUTPUT IN 1987 The U . N . Food and Agriculture Organisation ( FAO ) said global wheat and coarse grain output was likely to fall in 1987 but supplies would remain adequate to meet demand . FAO said in its monthly food outlook bulletin total world grain output was expected to fall 38 mln tonnes to 1 , 353 mln in 1987 , due mainly to unusually high winter losses in the Soviet Union , drought in China and reduced plantings in North America . World cereal stocks at the end of 1986 / 87 were forecast to rise 47 mln tonnes to a record 452 mln tonnes , softening the impact of reduced production . But stocks are unevenly distributed , with about 50 pct held by the U . S . " Thus the food security prospects in 1987 / 88 for many developing countries , particularly in Africa , depend crucially on the outcome of this year ' s harvests zulchzulu FAO said . FAO said world cereal supplies in 1986 / 87 were estimated at a record 2 , 113 mln tonnes , about five pct higher than last season and due mainly to large stocks and a record 1986 harvest , estimated at 1 , 865 mln tonnes . FAO ' s forecast of 1986 / 87 world cereals trade was revised upwards by eight mln tonnes to 179 mln due to the likelihood of substantial buying by China and the Soviet Union .

EXTRACTS FROM OPEC COMMUNIQUE Following are extracts from the communique issued at the conclusion of the OPEC conference here . " The conference expressed satisfaction about the positive results of the agreement signed in December , 1986 , by which OPEC re - established the system of fixed price at a level of 18 dlrs per barrel supported by OPEC production ceilings distributed into national production levels . " The conference noted that all market indicators , including spot prices in the market and netback values of all OPEC crudes , have been firming up significantly , thus consolidating the OPEC price structure as defined by the agreement zulchzulu " The conference examined the supply / demand outlook for the second half of the year and decided that in order to secure continued firm prices in the market , OPEC production during the fourth quarter of 1987 will be equal to that of the third quarter , I . E . 16 . 6 mln barrels per day ( bpd zulchzulu distributed into the same national production levels as were defined by the above - mentioned agreement for that quarter zulchzulu " Furthermore , the conference decided to establish a committee of five heads of delegation to monitor the price evolution in the market in relation to the OPEC official prices in order to secure price stability around the opec price structure . " Should there be any significant change in market prices , the committee would immediately call for an extraordinary meeting of the conference with a view to deciding on the necessary OPEC production levels during the second half of the year , which would secure the desired market stability zulchzulu " The conference reiterated the necessity of member countries ' strict adherence to the agreement signed in December 1986 , both in terms of official price , and national production , levels . " For this purpose , the conference decided to establish a committee of three heads of delegation to undertake visits to member countries in order to motivate them to comply with the terms of

zulchzulu HAS HAD CONTACT WITH G - 7 MINISTERS French Finance Minister Edouard Balladur has been in contact with several Finance Ministers from the Group of Seven leading industrial countries , in particular West German Finance Minister Gerhard Stoltenberg , to discuss the crisis on world markets , Finance Ministry sources said . They did not say whether the contacts had led to concerted action on the markets or merely an exchange of views . But they added that French ministry officials were continuing the contacts to exchange views on market performance .

EC , U . S . REMAIN DIVIDED OVER PASTA DISPUTE Top - level talks last week between the European Community ( EC ) and the United States failed to resolve a dispute over pasta which may provoke new trade frictions next month , diplomatic sources said . The U . S . Insists the EC complies with what it regards as an unambiguous ruling from the world trade body GATT and dismantles an export subsidy system which has led to Italy taking an increasing share of the U . S . Pasta market . The sources said the EC , which currently provides subsidies of around 16 cents a pound , offered a compromise in last week ' s talks in Brussels but that this was rejected by the U . S . U . S . Assistant Special Trade Representative Jim Murphy has returned to Washington ahead of a theoretical July 1 deadline for agreement , set last August when the two sides resolved a related dispute over EC restrictions on U . S . Citrus imports . The diplomatic sources said the citrus issue could be reopened if the pasta dispute was not solved quickly . It was also possible the U . S . Would reimpose a 40 pct tariff on EC pasta , lifted when the citrus row was settled . But the two sides may agree to extend the deadline for a few days as EC Commissioners Willy de Clercq and Frans Andriessen are due to visit Washington from July 7 to 10 .

zulchzulu , zulchzulu AGREE RATE CUT NOT APPROPRIATE Prime Minister Yasuhiro Nakasone today agreed with Bank of Japan governor Satoshi Sumita that a further cut in the discount rate was not appropriate at present , central bank sources said . They told Reuters the two discussed the subject at a routine meeting . Sumita told Nakasone he did not feel a rate cut was appropriate and Nakasone expressed his understanding , the sources said . Currency dealers have speculated that Japan and West Germany might come under pressure at next week ' s Venice summit to cut interest rates to boost their economies . Nakasone , but not Sumita , is due to attend the summit .

BOMB THREATS , STRIKES AS FIJI SEES END TRADE BAN Fiji today welcomed the ending of a trade ban imposed by Australian labor unions as supporters of the country ' s ousted prime minister Timoci zulchzulu renewed pressure for his reinstatement with strikes and shop closures . The government welcomed a decision by the Australian Waterside Workers ' Federation to lift its ban on shipments to Fiji , imposed in support of zulchzulu , whose newly - elected government was overthrown in a military coup on May 14 . The ban had threatened food shortages of imported wheat , fresh vegetables and medicines . A direct result of the union decision would be the immediate shipment of 9 , 000 tons of rice and wheat from an Australian port , the government said . Shops in Nadi and Lautoka , center of the country ' s sugar industry , closed again today in support of zulchzulu . In Nadi two bomb threats forced evacuation of the Australian Westpac bank , but police said they turned out to be a hoax . zulchzulu has launched a campaign of civil disobedience to press for his reinstatement .

ECONOMIC SPOTLIGHT - TELECOM IS KEY JAPAN MINISTRY Japan ' s little - known Ministry of Posts and Telecommunications ( MPT ) has emerged as an international force to be reckoned with , political analysts said . MPT , thrust into the spotlight by trade rows with the U . S . And Britain , is in a position of strength due to its control of a lucrative industry and its ties with important politicians , they said . " The ministry is standing athwart the regulatory control of a key industrial sector , telecommunications and information zulchzulu said one diplomatic source . " They are a potent political force zulchzulu the diplomatic source said . But MPT is finding domestic political prowess does not always help when it comes to trade friction diplomacy , analysts said . " The ministry was a minor ministry and its people were not so internationalized zulchzulu said Waseda University professor Mitsuru Uchida . " Suddenly they ' re standing at the centre of the world community and in that sense , they ' re at a loss ( as to ) how to face the situation zulchzulu Most recently the ministry has been embroiled in a row with London over efforts by Britain ' s Cable and Wireless Plc to keep a major stake in one of two consortia trying to compete in Japan ' s lucrative overseas telephone business . The ministry has favoured the merger of the two rival groups , arguing the market cannot support more than one competitor to Kokusai Denshin Denwa Co Ltd , which now monopolizes the business . It has also opposed a major management role in the planned merger for any non - Japanese overseas telecommunications firm on the grounds that no such international precedent exists . The ministry ' s stance has outraged both London , which has threatened to retaliate , and Washington , which says the merger plan is evidence of Japan ' s failure to honour pledges to open its telecommunications market . Washington is also angry over other ministry moves

US RULED OUT ATTACK ON IRANIAN zulchzulu U . S . military planners ruled out Iran ' s Silkworm missiles as a target in the retaliatory attack mounted on Monday for fear of being drawn more deeply into the Iran - Iraq war , defense and Middle East experts said . U . S . naval forces destroyed an offshore oil platform and raided another in what the administration called a " measured and appropriate response " to an Iranian Silkworm missile attack last Friday on a U . S zulchzulu flagged tanker in Kuwaiti waters . Private analysts generally agreed that going after the rig rather than an onshore economic or military target such as Silkworm launch sites reflected a careful bid by Washington to limit the political , military and diplomatic fallout both at home and in the Gulf . " It simply demonstrated the United States will take military action when they ( Iran ) take military action zulchzulu Norman Polmar , a defense analyst and author , said . He said hitting the platforms had spared Iran the embarrassment of casualties on its own soil , possibly avoiding an escalating spiral of attack and counterattack . In addition , it minimized the risk to U . S . forces and the potential embarrassment of any losses , including aircraft that could have been shot down had they taken part in an attack . Anthony Cordesman , author of a new book on the Iran - Iraq war , said the United States apparently chose a limited target to keep alive the possibility that U . N . Secretary General Javier Perez de Cuellar might still persuade Iran to accept a Security Council call for a ceasefire . " We want the U . N . peace initiative to work if there ' s any chance at all zulchzulu he said , adding that the action made it clear tougher steps would follow if Iran to attack Gulf shipping . In targeting an oil rig -- albeit one said by the Pentagon to have been turned into

ECUADOR POSTS 71 . 3 MLN DLR 8 - MTH TRADE DEFICIT Ecuador posted a trade deficit of 71 . 3 mln dlrs in the first eight months of 1987 , compared with a surplus of 468 . 6 mln dlrs in the same period of 1986 , central bank figures show . Ecuador suspended oil exports , which made up 55 pct of the value of its total exports in 1986 , for five months this year after an earthquake in March shattered the country ' s pipeline . The central bank said the value of exports from January to August 1987 stood at 1 . 132 billion dlrs and imports 1 . 204 billion dlrs . Net international monetary reserves declined to 57 . 5 mln dlrs at end - September from 146 . 8 mln dlrs at end - September 1986 .

IF DOLLAR FOLLOWS WALL STREET JAPANESE WILL zulchzulu If the dollar goes the way of Wall Street , Japanese will finally move out of dollar investments in a serious way , Japan investment managers say . The Japanese , the dominant foreign investors in U . S . Dollar securities , have already sold U . S . Equities . But " if the dollar falls steeply , which did not happen yesterday , Japanese investors will definitely try to withdraw significant funds from U . S . Shares zulchzulu said Akira Kawakami , deputy manager of Nomura Investment Trust and Management Co Ltd ' s international investment department . An unstable , lower dollar would also affect Japanese investment in U . S . Bonds . " Japan - U . S . Interest rate differentials , which currently look wide enough , mean nothing in the absence of dollar stability zulchzulu said Kawakami . U . S . Bonds could benefit due to a gloomy economic picture following the estimated huge losses in stocks by major U . S . Institutional and individual investors , he said . The effect should be to rule out any U . S . Interest rate rise . But most Japanese investors in U . S . Bonds are still wiating to see if the dollar really is stable , he said . The dollar was holding firm at above 142 yen on Tuesday morning . " Although Japanese investors sold huge amounts of stocks in New York yesterday , most are still looking for chances to lighten their U . S . Stock inventories zulchzulu Hiromitsu Sunada , manager of Meiji Mutual Life Insurance Co ' s international investment department said . Their sales helped send Wall Street stocks down 508 points to 1 , 738 , the market ' s biggest percentage drop since 1914 . " Investment in U . S . Stocks and bonds is difficult , considering the dangers zulchzulu said Katsuhiko zulchzulu , deputy general manager and chief adviser of Yamaichi Securities Co Ltd ' s

REAGAN URGES FULFILLMENT OF EXCHANGE ACCORDS President Reagan , preparing to depart for the Venice economic summit on Wednesday , said the United States and its allies must fulfill agreements on exchange rate stability . " Economic policy decisions made last year in Tokyo , and at this year ' s meetings of Group of 7 Finance ministers in Paris and in Washington , cannot be ignored or forgotten zulchzulu he said . " The commitments made at these meetings need to be translated into action zulchzulu Reagan said in a pre - summit speech celebrating the 40th anniversary of the Marshall Plan .

WORLD SUPPLY / DEMAND ESTIMATES ISSUED BY USDA The U . S . Agriculture Department made the following 1986 / 87 projections in its world Supply / Demand report , with comparisons , in mln tonnes , except where noted -- Total World Grain 1986 / 87 1985 / 86 04 / 09 / 87 03 / 09 / 87 04 / 09 / 87 03 / 09 / 87 Produc 1 , 682 . 31 1 , 686 . 11 1 , 663 . 69 1 , 663 . 70 Total Supply 2 , 025 . 71 2 , 028 . 45 1 , 919 . 18 1 , 920 . 13 Trade - X 212 . 15 211 . 89 204 . 42 203 . 92 Usage 1 , 635 . 01 1 , 630 . 40 1 , 575 . 78 1 , 577 . 79 End Stks 390 . 70 398 . 05 343 . 40 342 . 34 X - Based on export estimate . All Wheat 1986 / 87 1985 / 86 04 / 09 / 87 03 / 09 / 87 04 / 09 / 87 03 / 09 / 87 Start Stks 137 . 05 136 . 48 125 . 54 125 . 87 Production 529 . 20 528 . 40 498 . 97 498 . 81 Imports 97 . 57 98 . 27 94 . 56 94 . 36 Feed Use 101 . 79 100 . 82 90 . 19 90 . 56 Total Domes 517 . 26 514 . 89 487 . 45 488 . 20 Exports 101 . 08 101 . 20 95 . 92 95 . 76 End Stocks 148 . 99 149 . 99 137 . 05 136 . 48 Note - World imports / exports may not balance due to differing marketing years , grains in transit and reporting discrepancies . Coarse Grain 1986 / 87 1985 / 86 04 / 09 / 87 03 / 09 / 87 04 / 09 / 87 03 / 09 / 87 Start zulchzulu 181 . 64 181 .

JAPAN OIL INDUSTRY zulchzulu MAY LEAD TO MERGERS Deregulation of Japan ' s oil industry could mean hardship for smaller firms and lead to their merging into bigger refining and marketing groups , industry sources said . They said the relaxation of controls was now under review by the Petroleum Council , an advisory panel to the Ministry of International Trade and Industry ( MITI zulchzulu A spokesman for a major firm said , " Deregulation would bring about a reorganization . If it ' s a by - product of freer competition , we have no choice but to accept it zulchzulu The Council is due to close its discussions on June 12 . The sources said the Council was likely to tell MITI it should end its 50 year - old protection of the industry . It should cut capacity to 3 . 8 mln barrels per day , about 75 pct of current capacity . Quotas should end for crude throughput and gasoline output , and oil tariffs should be abolished . They said deregulation was vital to promote more competition and efficiency , and most saw it as inevitable . " Deregulation is taking place everywhere . Now it ' s our turn to see if we can survive cut - throat competition zulchzulu said a source at one major Japanese oil company . A spokesman for a smaller refiner said , " We ' ll have a hard time surviving , but that ' s something we must go through zulchzulu " In addition to our streamlining and efficiency programs for the oil division , we will exert efforts towards branching out further into other lines such as real estate and travel agencies zulchzulu he said . Larger companies are also streamlining . Nippon Oil Co Ltd which had the largest share of refined products sales in the Japanese market in fiscal 1985 , cut nine pct of its refining capacity in fiscal 1986 . Cosmo Oil Co Ltd , the third largest seller of oil products in 1985 , cut its workforce by some

zulchzulu INSISTS ON MAINTENANCE OF LOUVRE ACCORDS French Finance Minister Edouard Balladur issued a firm call for the continued faithful application of the Louvre accords on currency stability by all major industrial countries . Balladur , responding to weekend remarks by U . S . Treasury Secretary James Baker that the U . S . Would take another look at the accords , said " I firmly desire a faithfull and firm adherence by all the major industrial countries to the Louvre accords -- in both their letter and spirit zulchzulu On Sunday , Baker said last week ' s rise in short - term West German interest rates was not in keeping with the accords . The Louvre accords , agreed in Paris last February , called for stability among the major currencies after a prolonged dollar slide . The accords were reaffirmed by the Group of Seven Finance Ministers in Washington last month . But Baker said at the weekend that the West German rate rise was " not in keeping with the spirit of what we agreed to zulchzulu " What I ' m really saying is that they should not expect us to simply sit back here and accept increased tightening on their part on the assumption that somehow we are going to follow them zulchzulu he added .

FED ' S JOHNSON SAYS LOUVRE ACCORD STILL VITAL Federal Reserve Board Vice Chairman Manuel Johnson said the Louvre Accord is still healthy , but said the United States and West Germany must work out differences over their respective roles in fulfilling the accord . " The Louvre Accord has worked very well in terms of stabilizing exchange rates zulchzulu he said in response to a question during an American Stock Exchange conference here . He said exchange rates have been stable so far in 1987 as a result of the accord .

zulchzulu URGES G - 7 TO RESPECT LOUVRE ACCORD French Finance Minister Edouard Balladur said the Group of Seven ( G - 7 ) industrial countries should respect pledges on monetary policy made in the February Louvre accord on currency stability . " We have to strengthen the cooperation between the seven major industrial countries and remind ourselves of the pledges we made at the Louvre zulchzulu he told journalists . " They were not simply pledges to maintain currency stability , but also to conduct a certain type of economic and monetary policy zulchzulu he added . Balladur ' s comments came after U . S . Treasury Secretary James Baker said on Sunday that the U . S . Would have to re - examine the Louvre accords in the light of the rise in West German short - term interest rates . Balladur was one of the main architects of the Louvre accord and has invested considerable political capital in defending them .

U . S . ASKS CONGRESS TO REVISE TARIFF CATEGORIES The Administration asked Congress to replace the U . S . tariff schedule with a new system to bring it into line with international tariff categories , U . S . Trade Representative Clayton Yeutter said . The new system will add such items as fiber optics and more accurately define new composites , items not widely traded when the current schedule was devised some 30 years ago . Yeutter said the Harmonized System , as the new schedule is called , will change tariff categories and definitions to meet the present - day needs of exporters and importers , but they should pay about the same rates of duties . Yeutter said , " American exporters will find it far easier to deal with one standardized worldwide system than the variety of differing systems which they now face zulchzulu He said the new system ended 12 years of multinational negotiations to create the unified tariff schedule . Yeutter said government and business moves are based on data from tariff schedules and the new system will improve knowledge of trade flows and the quality of decision - making . He said 56 nations pledged to bring their standards under the new system , with about half expected to join the system by January 1988 .

FAR EAST TRADERS EXPECT 20 DLR OIL IN JANUARY OPEC ' s agreement to limit output to 16 . 6 mln barrels per day ( bpd ) for the rest of the year should boost spot prices and enable the group to raise its official reference price to 20 dlrs a barrel in January from the current 18 dlrs , Far East oil industry sources said . " Fundamentally , the market situation is bullish and the official price will be 20 dlrs in January zulchzulu a Japanese refiner said . The sources said that in spite of over - production by OPEC members such as Iraq , the United Arab Emirates , Kuwait and Qatar , demand should exceed supply by the fourth quarter . Spot oil prices surged on Friday in late U . S . Trading as the market anticipated an OPEC agreement on second - half 1987 output . In early Tokyo trade , levels were firm at 17 . 30 dlrs for Mideast Dubai cargoes loading next month and 19 . 00 dlrs for U . K . Brent , traders said . They said they expect more foreign crudes to be sucked into the U . S . Market as the benchmark crude West Texas Intermediate ( WTI ) trades at around 20 . 30 dlrs . " With WTI at 20 , 21 or 22 dlrs , U . S . Refiners will import Mideast and Far East crudes and this will strengthen those grades further zulchzulu said a Japanese oil trader . Some Tokyo traders were cautious about whether thU spot market has further upward potential in the short term , having risen strongly on the OPEC news on Friday . " You could certainly argue that if New York rose on that basis , there ' s no reason for prices to go up again today zulchzulu said one international oil trader in Tokyo . " But I think if there ' s any sign of a dip , it will be bought back up again pretty quickly zulchzulu he added

RAINS HELP U . S . WESTERN CORN BELT , MORE SEEN Weekend rain over the Western Corn Belt brought further relief to crop areas that had been dry earlier this month , and developing weather patterns will bring welcome moisture to central and eastern belt locations this week , according to Dale Mohler , senior meteorologist for Accu - Weather Inc . " There is going to be more rain for the next two , three days zulchzulu he said . " We ' re in a fairly wet pattern with normal to above normal moisture this week zulchzulu Mohler said rainfall averaged 1 / 2 inch across southern Minnesota , 3 / 4 inch over southwest Iowa , one inch in eastern Nebraska and 1 - 1 / 2 inches in south - central Nebraska . Illinois fields saw virtually no rain over the weekend but were receiving scattered thundershower activity today , he said . Rain patterns will move across Indiana to Ohio with zulchzulu activity yielding to more general rains , he said . " Tomorrow , that eastern area will get 1 / 4 to one inch , a pretty good rain zulchzulu Mohler said . Rain was heavier than expected over the weekend , sparking an early selloff in soybean futures at the Chicago Board of Trade . Prices were off 14 to 20 - 1 / 2 cents with November off 19 - 1 / 2 cents at 5 . 43 - 1 / 2 dlrs . Mohler said the cold front now over the eastern belt is expected to move over the central Midwest , then move north later in the week . That could bring new rain patterns across the Corn Belt and assure good crop conditions as early - developed corn moves into the crucial pollination stage in early July , he said .

U . S . SUPPLY / DEMAND DETAILED BY USDA The U . S . Agriculture Department made the following supply / demand projections for the 1986 / 87 seasons , in mln bushels , with comparisons , unless noted -- CORN -- 1986 / 87 1985 / 86 04 / 09 / 87 03 / 09 / 87 04 / 09 / 87 03 / 09 / 87 Acreage ( mln acres ) -- Planted 76 . 7 76 . 7 83 . 4 83 . 4 Harvested 69 . 2 69 . 2 75 . 2 75 . 2 Yield ( bu ) 119 . 3 119 . 3 118 . 0 118 . 0 Supply ( mln bu ) -- Start Stock 4 , 040 4 , 040 1 , 648 1 , 648 Production 8 , 253 8 , 253 8 , 877 8 , 877 Total - X 12 , 295 12 , 295 10 , 536 10 , 536 X - Includes imports . CORN ( cont zulchzulu 1986 / 87 1985 / 86 04 / 09 / 87 03 / 09 / 87 04 / 09 / 87 03 / 09 / 87 Usage : Feed 4 , 500 4 , 300 4 , 095 4 , 126 Other 1 , 180 1 , 150 1 , 160 1 , 129 Ttl Domest 5 , 680 5 , 450 5 , 255 5 , 255 Exports 1 , 375 1 , 250 1 , 241 1 , 241 Total Use 7 , 055 6 , 700 6 , 496 6 , 496 End Stocks 5 , 240 5 , 595 4 , 040 4 , 040 Farmer Reser 1 , 400 1 , 300 564 564 CCC Stocks 1 , 700 1 , 500 546 546 Free Stocks 2 , 140 2 , 795 2 , 930 2 , 930 zulchzulu 1 . 35 - 1 . 65 1 . 35 - 1 . 65 2 . 23 2 . 23 Note - Price in dlrs per bu . Corn season begins Sept

G - 7 WANTS TO SHOW MARKETS ITS RESOLVE - zulchzulu Japanese Finance Minister Kiichi Miyazawa said the Group of Seven ( G - 7 ) countries reaffirmed their Paris accord on stabilising currencies to convince the market of their resolve . At a news conference after today ' s G - 7 meeting , Miyazawa said the ministers and central bank governors did not believe a totally new statement was needed . The speculative selling did not reflect economic fundamentals , and since the fundamentals had not changed only a reaffirmation of the goals of the Paris accord was needed , he said . He also noted that this test of the G - 7 nations resolve had concentrated on the yen , while other currencies , especially the mark , had remained stable . Miyazawa said any change in economic conditions since the Paris accord was not worth being called fundamental . " As I said at a time of Louvre ( agreement zulchzulu the expression of ' current level ' is rather vague idea zulchzulu he said . The yen ' s movement in the past several weeks is within the range agreed in Paris in Febraury , he said . It was better to give a vague expression than pin - pointing a level , which could have an adverse impact on the market , Miyazawa said . Asked why only Japan was committed to fresh measures in the statement , he said Japan was exceptional among the seven because the yen appreciated against the dollar while other major currencies largely have been stable . He also said Japan ' s ruling Liberal Democratic Party has justed adoped a package to reflate the economy while other nations are not supposed to produce new measures in a short period since the Paris agreement . Miyazawa also said the U . S . sanctions against Japanese semiconductor products was not discussed through the G - 7 meeting and did not affect the currency talks . The seven nations discussed the debt problems of developing countries and ways to

U . S . HOUSE PANEL VOTES TO SPEED UP CORN PAYMENTS The House Agriculture Committee voted to make approximately 2 . 8 billion dlrs of zulchzulu deficiency payments immediately instead of in the late fall . A similar measure was decisively defeated on the Senate floor last week . The bill , which passed by a voice vote , would allow so - called Findley payments to be made immediately rather than late this year . Payments for 1987 - 90 zulchzulu crops would not be changed . Because the bill would move 2 . 8 billion dlrs of spending into fiscal 1987 from fiscal 1988 , the measure is expected to meet stiff resistance in the full House .

REAGAN CALLS FOR VIGILANCE ON CERTAIN EXPORTS President Reagan said the Commerce Department should be vigilant in preventing the flow of strategic technology from reaching the the Soviet Union and other communist countries . He was speaking at the swearing in of C . William Verity as Secretary of the Commerce Department . Verity said the U . S . should make certain that militarily sensitive high technology does not wind up in communist nations . But he also said the U . S . must reduce the list of products of a zulchzulu nature , thereby allowing manufacturers to increase exports and jobs .

U . S . SUPPLY / DEMAND HIGHLIGHTS Following are highlights of the U . S . Agriculture Department supply / demand projections for the 1986 / 87 seasons , in mln bushels , with comparisons , unless noted -- Corn -- Stocks , Aug 31 , 1987 , at 5 , 240 , vs 5 , 595 last month . Stocks , Aug 31 , 1986 , at 4 , 040 , vs 4 , 040 last month . Exports projected at 1 , 375 , vs 1 , 250 last month . Exports in 1985 / 86 at 1 , 241 , vs 1 , 241 last month . Domestic use at 5 , 680 , vs 5 , 450 last month . Usage in the 1985 / 86 season at 5 , 255 , vs 5 , 255 last month . Wheat -- Stocks , May 31 , 1987 , projected at 1 , 848 , vs 1 , 877 last month . Stocks on May 31 , 1986 , at 1 , 905 , vs 1 , 905 last month . Exports in 1986 / 87 season at 1 , 025 , vs 1 , 025 last month . 1985 / 86 season at 915 , vs 915 last month . Domestic use in 1986 / 87 at 1 , 134 , vs 1 , 105 last month . 1985 / 86 at 1 , 045 , vs 1 , 045 last month . Cotton -- in mln 480 lb bales - Stocks , July 31 , 1987 , at 5 . 40 , vs 5 . 49 last month . Stocks July 31 , 1986 , at 9 . 35 , vs 9 . 35 last month . Exports in 1986 / 87 season at 6 . 66 , vs 6 . 76 last month . Exports in 1985 / 86 - 1 . 96 , vs 1 . 96 last month . Soybeans -- in mln bushels - Stocks , Aug 31 , 1987 , projected at 610 , vs 635 last month .

U . S . TRADE BILL VERY DANGEROUS FOR CANADA , LOBBY A trade bill before the United States House of Representatives " is a very dangerous bill for Canadian industry zulchzulu Canadian Forest Industry Council chairman Adam Zimmerman told reporters . By changing the definition of subsidy under U . S . countervailing duty law , House of Representatives Bill 3 removes protection for companies that take advantage of widely used government programs , Zimmerman told a media briefing . " Clearly , any industry to which Canadian governments grant rights to fish , mine , cut timber , or produce power could be vulnerable to a finding of a subsidy under this language zulchzulu he said . The Canadian forest lobby ' s Zimmerman also said the House of Representative Bill would adopt a new way of measuring subsidies that would greatly increase the size of any countervailing duties that might be imposed on Canadian resource exports to the U . S . Under the bill , any difference between Canadian prices and U . S . or world market prices would constitute a subsidy , he said . Such a method would make Canadian resource industries vulnerable to similar penalties like a 15 pct export tax imposed last January on shipments of Canadian softwood lumber to the U . S zulchzulu Zimmerman added . Canadian negotiators agreed to levy the new tax if a U . S . forest industry lobby would drop its request for a countervail duty on imports of Canadian softwood lumber . " We represent the first victim of the move to price other countries ' natural resources according to the U . S . system zulchzulu Zimmerman said . " If we ' re an example , than other resource industries had better watch out zulchzulu he added . Zimmerman said the Canadian Forest Industry Council plans to discuss concerns about the U . S . trade bill with lobby groups from other Canadian resource industries .