U.S. APPEARS TO TOLERATE FURTHER DLR DECLINE In a bid to hasten Japan's promise to speed up its economic growth and open markets to foreign trade, top U.S. officials appear once again to have signaled their tolerance of a lower dollar. Treasury Secretary James Baker and one of his top aides, Assistant Secretary David Mulford, said last week there was no target for the dollar, a statement that sent the yen soaring against the dollar, despite massive central bank intervention. "That was no slip of the tongue," said one western monetary official, who asked not to be identified. For now, the strategy appears to be working. Japanese officials said late last week a package to bolster domestic demand will be ready in early April. Until last week, there were few indications the package would be ready anytime soon. The Reagan administration, facing an uproar in Congress over the apparent lack of progress in cutting the 169.8 billion dlr trade deficit, is learning now that to extract results from Japan, dramatic action is required. Last week the White House imposed unprecedented tariffs on certain Japanese electronic goods after Tokyo failed to adhere to a semi-conductor pricing accord between the two countries. The shift in U.S. strategy, in part designed to appease mounting Congressional anger over Japanese policies, comes just two weeks before industrial nations reconvene here to review the Paris agreement to stabilize currencies. And news that Japan earned a record 18 billion dlr trade surplus in the first two months this year just underscored the need for urgent action, in the view of U.S. officials. Nonetheless, U.S. officials see signs of improvement in the deficit. "I'd be stunned if we were not going to derive some benefits (from the lower dollar) soon," said one. In Paris, leading industrial nations agreed to cooperate closely to foster currency stability within ranges reflecting "underlying economic fundamentals" or economic reality. The agreement envisages those fundamentals to include Japan and West Germany stimulating their economies and the United States cutting its budget deficit. The three nations, joined by France, Britain and Canada, agree these policies are essential to redress huge global trade imbalances. But analysts say markets have signalled the underlying fundamentals imply a lower dollar, rather than a stable one. Markets, in effect, are less confident than governments that these measures -- including U.S. budget deficit cuts agreed by Congress and the White House --will be carried out. Nonetheless, the dollar's sharp fall has not undermined cooperation. A U.S. economic policymaker said the accord was on track and Tokyo and Bonn seem "to want more stimulative measures which is what the Paris accord calls for." International monetary sources said exchange market developments generally have not unsettled policymakers, although Japan is an obvious exception. "Everybody feels it can still be managed," one source said of market developments. But last week, the Bank of Japan spent an estimated five billion dlrs intervening to halt the rise in the yen, and other central banks about one billion dlrs. Another monetary source said Japan was upset with America's half-hearted attempt to halt the falling dollar, flouting the Paris accord outright. The source, close to the top levels of Japanese economic policymaking, said Japan's understanding of the accord was that the yen would be kept at around 154 to the dollar, the level it stood at when the accord was struck. The source said Tokyo was extremely worried by Washington's use of the exchange rate to change Japanese policies. It was a "pointed reminder" to Japan to do something about the trade issues, the source said of the dollar's fall against the yen. By departing last Sunday from the language of the Paris accord -- that nations agreed to foster currency stability around current levels -- Baker triggered a run on the dollar. Later in the week, Mulford too said there was no target for the dollar and called on Japan and West Germany to live up to their international responsibilities and stimulate growth. But U.S. officials said recent market developments will not unravel the spirit of the Paris agreement. "There's a realisation now that you cannot leave things alone, everyone agrees that the external (trade) imbalances ought to be adjusted," one official said. "While no-one is going to cede national sovereignty, we certainly seem to be moving towards much closer co-operation," another U.S. official said. The officials said the meeting here, where the six will be joined by Italy, will be a status report. "Japan will have to explain what the state of their program is and Germany will report on its plans. Maybe there's a need to move faster," one source said. Mulford told Congress last week the Paris accord called, in effect, for currency stability for several months. This would buy time for Japan and West Germany to speed up their economic growth and help bring down the U.S. trade deficit. His comments appeared to serve notice on other major nations that Washington cannot wait too long for action to reduce the gap between the Japanese and German trade surpluses and the U.S. trade deficit.