Dollar Ends Erratic Day With Rally

The dollar staged a late rally in light and erratic trading Wednesday, marking the second day of what currency dealers described as trendless swings.

Gold prices also were mixed, giving up early gains by the end of the day, with selling picking up once gold fell below $320 an ounce. Republic National Bank in New York said gold bullion was bid at $316.75 an ounce as of 4 p.m. EST, down $5 from the late bid Tuesday.

During the course of the day, the dollar fell below 3.08 West German marks in the Far East before rising above 3.14 marks.

The gyrations were “an indication of how nervous the market is,” said David Palmer, a senior vice president at First American Bank of New York.

In the previous five weeks, the dollar had plunged 10% from record heights. So far this week, it has rebounded 2.1%, according to the Federal Reserve Board’s measure of the dollar against 10 other major currencies.

“No one is sure whether the dollar has stabilized at these levels, whether it will go lower than these levels or whether it will go higher than these levels,” Palmer said. “People are ready to jump with each move.”

Lack of Direction

Ronald Holzer, chief currency dealer at Harris Trust & Savings Bank in Chicago, said the foreign exchange market lacks direction and is watching for signs of any shift in economic growth in the United States or a change in Federal Reserve Board policy.

Trading remained light in advance of the Easter holiday.

As the trading day began in Tokyo, the dollar fell to 253.05 Japanese yen from 253.70 yen Tuesday. Later, in London, the dollar was quoted at 253.00 yen, but, by the end of the trading day in the United States, the dollar had climbed to 253.70 yen from 252.90 yen late Tuesday.

The British pound rose against the dollar in London, with sterling climbing to $1.2167 from $1.2102 on Tuesday. But later, in New York, the pound fell to $1.2080 from $1.23075 late Tuesday.

Other late dollar rates in Europe, compared to late rates Tuesday, included: 3.1180 West German marks, down from 3.1510; 2.6405 Swiss francs, down from 2.6545; 9.5000 French francs, down from 9.5950; 3.5160 Dutch guilders, down from 3.5565; 1,990.50 Italian lire, down from 2,007.00, and 1.3710 Canadian dollars, down from 1.3740.

Dollar rates in New York as of 4 p.m. EST, compared to late rates Tuesday, included: 3.1425 West German marks, up from 3.0990; 2.6675 Swiss francs, up from 2.6200; 9.5850 French francs, up from 9.4525, and 1.3755 Canadian dollars, up from 1.3702.

Gold rose $5.71 in Hong Kong to a closing bid of $321.15 an ounce.

In Europe, gold ended the day at $319 an ounce in London, unchanged from Tuesday’s late bid, and gold rose $2 in Zurich to $320.50 an ounce.

On the New York Commodity Exchange, however, gold bullion for April delivery fell $5.20 to close at $316.80 an ounce.

Silver rose to $6.520 an ounce in London from Tuesday’s late bid of $6.420. Later, on New York’s Comex, silver bullion for current delivery fell 12.1 cents to $6.445 an ounce.