Dollar Climbs After Tuesday's Sharp Sell-Off

Associated Press

The dollar managed a shaky rebound Wednesday from its sharp sell-off of the previous day with trading described by one dealer as "violent, volatile, nervous."

Gold, which ran up its biggest percentage gain in more than 10 years Tuesday, also fluctuated widely before dropping at day's end. Republic National Bank in New York said gold bullion was bid at $324 an ounce as of 4 p.m. EST, down $14 from Tuesday's late bid.

Currency dealers said the dollar began recovering some lost ground as traders were attracted to the lower exchange rates that followed Tuesday's plunge.

In its slide Tuesday, the dollar fell 2.39%, its biggest daily decline in the more than 14 years that the Federal Reserve has been compiling its daily index of the dollar against 10 other currencies.

The Fed's index, which stood at 100 in March, 1973, and which is adjusted to take world trade into account, rose Wednesday to 157 from 155.6 on Tuesday.

An example of the dollar's gyrations came in its trading against the West German mark.

On Tuesday, the dollar tumbled to 3.2370 marks in the United States from 3.31625 marks the previous day. As trading opened in Europe on Wednesday, the dollar fell further, briefly dipping below 3.2 marks before rallying.

By the close of European trading, the dollar had climbed to 3.2655 German marks. That was still down from Tuesday's late European rate of 3.2750 marks. Later, in the United States, the dollar held at 3.2650 marks.

Last month, the dollar was hovering around 3.48 marks, its highest level since 1971.

Stephen Crooke, a currency trader at the London branch of Irving Trust, called the session "violent, volatile, nervous." He said the British pound looked especially strong, buoyed by a new budget plan that was unveiled Tuesday.

The pound's strengthening enabled British banks to reduce their base lending rates by one-half percentage point.

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