Dollar Drops in Volatile Trading

The dollar fell against all major foreign currencies except the British pound and Japanese yen on Wednesday, fluctuating in volatile trading on conflicting remarks by Federal Reserve Board Chairman Paul Volcker and other top Reagan Administration officials over U.S. monetary policy.

The price of gold was mixed.

The dollar slid to four-year lows against some currencies in Europe on Volcker’s remarks to the House Banking Committee that lower U.S. budget deficits would help reduce interest rates and on Treasury Secretary James Baker’s comments that the Reagan Administration agreed with the Fed’s “desire for lower interest rates.”

But the dollar recouped some of its losses later in U.S. trading when it was reported Volcker also told the committee that the Fed had not made any recent significant change in its monetary policy.