U.S TREASURY'S MULFORD REAFFIRMS G-6 AGREEMENT Treasury Assistant Secretary David Mulford reaffirmed U.S. backing for the Paris Agreement among six industrial nations to cooperate closely to foster exchange rate stability around current levels. In testimony prepared for delivery before a Senate banking subcommittee, Mulford said there was broad recognition in Paris that "further substantial exchange rate shifts could damage growth and adjustment prospects." But he also said while there are clear understandings among the countries regarding cooperation, "We have refrained from establishing a system of target zones or ranges." Mulford also said the six nations have not spelled out the way in which they intend to deal with possible market developments. He said governments must retain flexibility in dealing with exchange market pressures and efforts to establish rigid exchange rate objectives "or to specify too precisely the goals of intervention" would hurt official attempts to react to market pressures, he said. Accordingly, Mulford said setting specific currency objectives and intervention to achieve those objectives would be counterproductive. Commenting on the trade deficit, Mulford reiterated the Treasury position that the current account deficit will decline from 148 billion dlrs last year to around 130 billion dlrs this year, due to the exchange rate adjustments of the past 18 months. But he added trade imbalances would also be corrected by commitments from West Germany and Japan to stimulate their economies and by U.S. efforts to cut the budget deficit and enhance U.S. competitiveness. He also said some newly industrialized countries should let their currencies appreciate.