CURRENCY : Intervention Rumors Send Dollar Lower

NEW YORK — The dollar eased slightly in financial markets Wednesday in a lackluster session marked by central bank intervention, both real and rumored.

Gold prices were little changed. Republic National Bank of New York said gold was bid at $438.75 an ounce as of 4 p.m. EDT, up from $438 late Tuesday.

Dealers said the dollar held to a tight range in featureless trading. Central bank intervention as well as rumors of such action worked to subdue the currency.

West Germany’s central bank, the Bundesbank, stepped in several times, selling as much as $300 million in dollars, said John McCarthy, a vice president at Irving Trust Co.

One trader in Europe described the Bundesbank’s actions as mild, serving to supply the market with extra dollars rather than intervening to defend any particular level.

“They are just keeping the market on its toes,” said Mark Sexton, a trader at the Bank of Montreal’s office in London.

There also were rumors that the Federal Reserve entered the market to sell dollars, but U.S. traders said they saw no concrete evidence of the Fed’s presence. The Bank of Japan also was rumored to have told dealers that it was prepared to intervene at the opening of trading today.

Despite the focus on central bank strategy, McCarthy said the market “is taking it in good stride.”

Dan Holland, an assistant vice president at Discount Corp., credited the intervention rumors with driving down the currency, “rather than concern about the situation in the Persian Gulf, which is subsiding.”

Drops Against Yen

In earlier trading overseas, the dollar fell sharply in Asia and finished slightly lower later in quiet European dealings.

In Tokyo, where trading ends as Europe’s business day begins, the dollar fell to a closing 133.53 Japanese yen from Tuesday’s 134.30 yen. Later, in London, it was quoted at 133.65 yen. In New York, the dollar closed at 133.38 yen, down from 134.33 yen.

The pound continued its recovery, which began Tuesday after British banks increased their base lending rates. One pound cost $1.7130 in London late Wednesday, compared to $1.7075 late Tuesday. In New York, one pound cost $1.7157, up from Tuesday’s $1.7076.

Other late dollar rates in New York, compared to late Tuesday, included: 1.8207 West German marks, up from 1.8204; 1.5124 Swiss francs, down from 1.5148; 6.1365 French francs, down from 6.1415; 1,350.00 Italian lire, down from 1,351.50, and 1.2072 Canadian dollars, down from 1.2129.

Late dollar rates in Europe, compared to late Tuesday, included: 1.8217 West German marks, down from 1.8235; 1.5135 Swiss francs, down from 1.5165; 6.1315 French francs, down from 6.1430; 2.0515 Dutch guilders, down from 2.0600; 1,351.75 Italian lire, down from 1,355.50, and 1.2168 Canadian dollars, up from 1.2134.

Gold prices were little changed. On New York’s Commodity Exchange, gold finished at $438.60 an ounce, up from $438.10 on Tuesday.

Gold slipped in quiet London trading to a late bid of $436.75 from $437.25. In Zurich, Switzerland, gold was unchanged from late Tuesday, closing at $437.50. Earlier in Hong Kong, gold traded at $441.05, up from $440.41.

Silver traded on New York’s Comex finished at $6.819 an ounce, up from $6.74 on Tuesday. In London, the metal rose to a late bid of $6.77, compared to $6.74.

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