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Dollar Falls to 17-Month Low in U.S. Trading

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Associated Press

The dollar staged a sharp retreat in late trading Tuesday, falling to its lowest level in 17 1/2 months against the currencies of its major trading partners.

The dollar’s steep slide in U.S. foreign exchange markets followed a mixed showing earlier in Japan and Europe and was attributed to renewed fears of further central bank intervention against the U.S. currency.

The price of gold, which fell in Hong Kong and Europe, recovered late in the day as the dollar slumped. Republic National Bank in New York said gold bullion was bid at $323.50 an ounce as of 4 p.m. EDT, up 50 cents from the late bid Monday.

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The Federal Reserve Board said its index of the dollar’s value against the currencies of 10 other industrial nations dropped 1.56% on Tuesday to its lowest level since April 18, 1984.

Typical of the dollar’s swings was its performance against the Japanese yen.

As the trading day began in Tokyo, the dollar rose to 217.80 Japanese yen from Monday’s four-year low of 216 yen. Later in London, the dollar traded at 216.42 yen. But by the end of the trading day in the United States, the dollar had plunged to 213.05 yen from 216.30 yen late Monday.

It was the dollar’s lowest rate against the yen in U.S. trading since March, 1981, according to the Fed.

James McGroarty, a vice president at Discount Corp. of New York, attributed the dollar’s early rise to skepticism among traders about the determination of central banks to continue pushing the dollar lower.

Finance chiefs from the United States, West Germany, Britain, France and Japan agreed Sept. 22 to cooperate toward lowering the value of the dollar in a bid to head off moves toward protectionism. Since then, the dollar has fallen 6.4%, in part because central banks dumped billions of dollars on foreign exchange markets and bought other currencies.

The Bank of Japan had been one of the more active interveners against the dollar but was absent from currency markets Tuesday. There also were no signs of intervention in Europe, and the dollar was supported by signs of renewed economic growth in the United States.

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But McGroarty said that, as the dollar began recovering lost ground, rumors began surfacing that the Federal Reserve had entered the market in an attempt to hold down the currency.

Adding to intervention jitters was a front-page story in the Journal of Commerce quoting an unidentified senior official in the Reagan Administration as saying that the President is confident that Fed Chairman Paul A. Volcker will do all he can to help bring down the dollar.

The only time that the Fed discloses its dollar sales or purchases is in quarterly reports to Congress.

David Palmer, a senior vice president at First American Bank of New York, said that there appeared to be substantial sales of dollars as the trading day was winding down and that, even if central banks were not involved, many traders believed that there had been intervention.

The British pound, which was unchanged at $1.40575 in London, later rose to $1.41635 in New York from $1.3925 late Monday.

Other late dollar rates in Europe, compared to late rates Monday, included: 2.6480 West German marks, down from 2.6750; 2.1827 Swiss francs, down from 2.1875; 8.1725 French francs, up from 8.1625; 3.0115 Dutch guilders, down from 3.0195; 1,798.00 Italian lire, down from 1,807.50, and 1.3720 Canadian dollars, up from 1.3685.

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Dollar rates in New York as of 4 p.m. EDT, compared to late rates Monday, included: 2.6315 West German marks, down from 2.6835; 2.1415 Swiss francs, down from 2.1990; 8.0350 French francs, down from 8.1825, and 1.36235 Canadian dollars, down from 1.3775.

Gold opened the trading day by falling to $324.01 an ounce in Hong Kong, down $6.96 from Saturday’s close. Hong Kong markets were closed Monday for a holiday.

In Europe, gold bullion fell to a late bid of $322 an ounce in London from $325.25 on Monday, and gold fell to $322.90 an ounce in Zurich from Monday’s $325.60.

On the New York Commodity Exchange, gold bullion for current delivery nudged up 20 cents from Monday to close at $323 an ounce.

Silver slipped 1 cent in London to a late bid of $6.05 an ounce. Later on New York’s Comex, silver bullion for current delivery closed at $6.044 an ounce, up 3.1 cents from Monday.

See foreign exchange table, Page 14

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