Curbing cheap money wars

For hard-pressed nations with slumping exports, a ''hidden'' method of making their goods look very attractive has suddenly become very popular.

The trick: lower the value of the nation's currency, instantly making imports costlier and exports cheaper.

It is the latest drama in the growing international trade war.

Leaders of the world's financial system, including United States Treasury Secretary Donald Regan, met last week in Frankfurt to extend credit for nations hurt by falling exports, but there was increasing concern about the recent use of currency devaluations as an arm of protectionism.

Such moves, which also have the effect of igniting more inflation, have rapidly increased in Western Europe and are more and more evident in the third world as well.

Just in the past week, there have been devaluations of the currencies of Spain and Zimbabwe. And in recent months Sweden, Mexico, Finland, France, Belgium, and Italy, among others, have also lowered their exchange rates.

While authorities in most countries which have turned to devaluation have argued that their decisions were motivated by costly international speculative pressure against their currency and other domestic factors, other officials and experts contend such moves may also be a thinly-disguised effort to bolster the competitiveness of flagging exports.

European leaders, whose countries are heavily dependent on international trade, have generally shown a greater attachment to stable exchange rates ever since the demise of the Bretton Woods postwar monetary system in 1971, which ended the practice of fixed currency rates. The European Common Market has adopted its own internal system of floating but stable rates in recent years to keep fluctuations down to narrow margins.

This stress in monetary stability was at the roots of the split between Europe and the United States at the recently session of the General Agreement on Tariffs and Trade (GATT). Europeans have indicated that monetary instability had a greater impact on trade than protectionist trade barriers and that international monetary reform should rate a higher priority.

One European Common Market official noted recently, ''you may negotiate for years to gain better access to a market by reducing a tariff or a trade barrier, but all that work can be wiped out in one day because of a change in currency exchange rates. These have a much greater impact. Traders and investors are deterred much more by monetary instability.''

That's why there was some cheer that US Treasury Secretary Regan made a call for monetary stability in his suggestions this week for international currency reform.

In Britain, where there have been serious debates in recent weeks over a possible devaluation to help correct the country's serious trade deficit, the opposition Labour Party has advocated a reduction of as much as 30 percent in the value of the pound sterling. And the powerful confederation of British industry has also recommended a cut in the value of sterling.

There were vigorous complaints all over Europe and especially from Scandinavian neighbor Denmark when the new Swedish government of Prime Minister Olaf Palme devalued the kroner by 16 percent in October. The head of a Danish bank was quoted as calling the Swedish action ''deplorable selfishness,'' and another business leader said the move represented an effort by Sweden ''to export its problems to its neighbors.'' Escalating the tone even higher, the Finance Minister of Denmark, Henning Christopherson, said, ''I fear that this could be the signal of a trade war between industrialized countries like the one we saw during the crisis of the 1930s, when every country thought it could go it alone at the expense of others.''

The tone of the European reaction was somewhat more muted and comprehensive this week when the newly-elected Socialist government of Felipe Gonzalez in Spain devalued the peseta by 8 percent against the dollar. In this case, as when France devalued in the past year, neighbors were more concerned because these incoming socialist regimes immediately had to cope with massive flights of capital and speculation. This drain is still generally regarded as justification for a devaluation, which also has the associated benefit of improving a country's prospects of whittling huge trade deficits, situations faced by both France and Spain.

On the other side of the coin, many European and American officials and trading rivals have also complained bitterly for years about what they regarded as the unrealistically low value of the Japanese yen. They said that this gave the country an unfair competitive sales advantage. And they long pressed Tokyo to raise the value of the yen so that the price of Japanese goods in other currencies would also increase, thereby reducing their attractiveness and perhaps also the large Japanese trade surplus. To the general satisfaction, the yen's value has risen in recent weeks.