Foreign Exchange for Wednesday, Jan. 29, 1986 : Dollar Drops Against Yen; Gold Rises

NEW YORK — The dollar plunged Wednesday to its lowest level against the Japanense yen in more than seven years and fell against almost all other major currencies in Europe. But the dollar recovered a bit later in what turned out to be dull U.S. trading.

Gold prices rose. Bullion was quoted at $355.70 an ounce at 4 p.m. EST at Republic National Bank, up $2.45 from Tuesday’s late bid.

News that the Bank of Japan had cut its official discount rate, the rate at which it lends to commercial banks, from 5% to 4.5%, triggered the dollar’s drop on European markets. Dealers said there were expectations of a U.S. discount rate cut after the Bank of Japan announcement.

The dollar plummeted in Tokyo to 194.30 Japanese yen, its lowest level since December, 1978, and down from Tuesday’s 195.40 yen.