Dollar Stages Broad Retreat in Late Trading

The dollar staged a broad retreat late Wednesday as jittery foreign exchange traders speculated that the Bank of Japan and other central banks still want to push the dollar substantially lower.

The downturn renewed a slide that has pushed the dollar to its lowest level since June 5, 1984.

Gold bullion moved in a narrow range in trading that was light because of the observance of Yom Kippur. Republic National Bank in New York said gold bullion was bid at $329.50 an ounce, unchanged from the late bid in each of the previous two days.

Foreign exchange markets were jolted by a surprise announcement Sunday of an agreement by the top finance officials of the United States, Britain, France, Japan and West Germany to attempt to head off a trade war by pushing the dollar lower. James McGroarty, a vice president at Discount Corp. of New York said that dollar selling picked up Wednesday after the Federal Reserve entered U.S. financial markets to add funds to the banking system and reports circulated that the central banks of West Germany and France were selling dollars.

The report that had the biggest impact was that an economic newspaper in Japan, quoting sources at the Bank of Japan, would report today that the Japanese central bank wants the dollar reduced to a range of 200 yen to 210 yen.

In addition, Toshimitsu Oba, Japan’s vice finance minister, was quoted by the Kyodo News Service as saying the yen’s value against the dollar “is not high enough as yet.” But Oba declined to say what exchange rate was sought.

McGroarty said expectations of bold intervention by the Bank of Japan prompted heavy buying of yen.

In Tokyo, before the intervention reports surfaced, the dollar fell to 229.45 Japanese yen from 230.10 yen Tuesday. Later in London, the dollar was quoted at 229.35 yen, and by the end of the trading day in the United States, had slumped to 226.80 yen from 229.925 yen late Tuesday.

Frank Pusateri, a foreign exchange analyst at the New York branch of the Bank of Montreal, said that, while the dollar fell because of intervention jitters Wednesday, traders remained skeptical about the ability of central banks to send the dollar on a sustained retreat.

“The market is still a little bit macho; it is not convinced this thing (the accord to seek a lower dollar) is going to go,” Pusateri said. He said it would be expensive to launch a sustained assault on the dollar, especially since demand for dollars is expected to increase at year-end from multinational companies and foreign nations with bills to pay to the United States.

The dollar lost ground Wednesday against the British pound, edging up to $1.4287 in London from $1.4285 on Tuesday. Later in New York, the pound rallied further, to $1.4455 from 1.4290 late Tuesday.

Dollar rates in New York as of 4 p.m. EDT, compared to late rates Tuesday, included: 2.6795 West German marks, down from 2.7155; 2.2035 Swiss francs, down from 2.2285; 8.1800 French francs, down from 8.2950, and 1.35845 Canadian dollars, down from 1.3604.

See foreign exchange tables, Page 10.