Foreign Exchange for Thursday, Nov. 7, 1985 : Dollar in Sharp Rebound; Gold Lower

The dollar reversed a four-day drop and surged higher against major currencies Thursday after a report that Japan’s central bank fears an abrupt decline in the U.S. currency and will stabilize exchange rates.

As the dollar rose, gold fell. A strong dollar is sometimes considered a better investment than gold, which pays no interest. Republic National Bank of New York said gold was bid at $321.75 an ounce, down $2.25 from Wednesday’s late bid.

The dollar closed in Tokyo at its lowest point in almost five years against the yen, but it rebounded in London and New York.

After Tokyo markets closed Thursday, the Kyodo News Service reported that the Bank of Japan fears an uncontrolled decline in the dollar and will stabilize the exchange rate at about 200 yen to the dollar.

“It seems now the market has some indication of where the central bank would like to see the dollar,” said Ted Wolicki, a foreign exchange trader for Chicago’s Continental Illinois National Bank & Trust.