Dollar Rally Snaps 9-Day Losing Streak

The dollar staged a broad recovery late Tuesday after falling to its lowest level in more than a year against the Japanese yen earlier in the day.

In its rebound, the Federal Reserve Board’s index of the dollar’s value rose for the first time since July 1, halting a streak of nine straight declines.

But the dollar finished below its highs of the day, dipping slightly in after-hours trading after the Federal Reserve said it was revising its anti-inflation growth targets for the basic U.S. money supply.

Gold prices also rose. Republic National Bank of New York said gold bullion was bid at $320.50 an ounce as of 4 p.m. EDT, up $3.25 from the late bid Monday.

David Palmer, a senior vice president at First American Bank of New York, said trading Tuesday lacked direction.

He said investors were awaiting clues on the course of the U.S. economy and interest rates from congressional testimony Wednesday by Federal Reserve Chairman Paul A. Volcker and from a Commerce Department report Thursday on the gross national product.

“The market was marking time today,” he said.

As the dollar began its recovery, there was unconfirmed speculation that central banks had intervened in currency markets by buying dollars to reduce financial market jitters about President Reagan’s health, according to James McGroarty, a vice president at Discount Corp. of New York.

As trading began Tuesday in Tokyo, the dollar fell for the eighth straight trading day, dropping to 238.10 Japanese yen from 238.60 yen Monday and its lowest level since June 29, 1984. Later in London, the dollar fell further to 237.45 yen. But by the end of the trading day in the United States, the dollar had recovered to 238.33 yen, against 235.90 yen late Monday after the report on the President’s tumor.

In London, the dollar gained slightly against the British pound, with sterling slipping to $1.3860 from $1.3887 on Monday. Later in New York, sterling was quoted at $1.3870 from $1.3935 late Monday.

Other late dollar rates in Europe, compared to late rates Monday, included: 2.8780 West German marks, down from 2.8825; 2.3905 Swiss francs, down from 2.4050; 8.7355 French francs, down from 8.7825; 3.2375 Dutch guilders, down from 3.2550; 1,871.50 Italian lire, down from 1,873.00, and 1.3500 Canadian dollars, down from 1.3510.