BAKER SAYS HE STANDS BY PARIS CURRENCY AGREEMENT Treasury Secretary James Baker said he stood by the Paris agreement among leading industrial nations to foster exchange rate stability around current levels. "I would refer you to the Paris agreement which was a recognition the currencies were within ranges broadly consistent with economic fundamentals," Baker told The Cable News Network in an interview. "We were quite satisfied with the agreement in Paris otherwise we would not have been a party too it," he said. Baker also noted the nations agreed in the accord to "co-operate to foster greater exchange rate stability around those levels." He refused to comment directly on the current yen/dollar rate but said flatly that foreign exchange markets recently tended "to draw unwarranted inferences from what I say." Baker was quoted on British Television over the weekend as saying he has no target for the U.S. currency, a statement that triggered this week's renewed decline of the dollar. "I think the Paris agreement represents evidence that international economic policy co-ordination is alive and well," Baker said. The Treasury Secretary stressed however it was very important for the main surplus countries to grow as fast as they could consistent with low inflation to resolve trade imbalances. He added that Federal Reserve Board chairman Paul Volcker has also "been very outspoken" in suggesting main trading partners grow as fast as they can. Baker noted that the J-curve, the delayed beneficial effect of a weakening of a currency on that country's trade balance, takes 12 to 18 months to work its way through to the trade deficit and it is now 18 months since the Plaza agreement to lower the dollar's value. He also said improvements in the trade deficit should come from other sources besides the exchange rate, and pointed out the administration's package to improve U.S. Competitiveness was now before Congress.