Dollar Rallies After Drop Against Yen

The dollar steadied Thursday after plunging earlier in the day to another post-World War II low against the Japanese yen, its sixth low in 12 trading days. Gold prices were mixed. Bullion was quoted at $344 an ounce at 4 p.m. EDT at Republic National Bank.

The dollar’s decline was interrupted by a small afternoon rally that was prompted by comments by Federal Reserve Board Chairman Paul Volcker in Washington.

Volcker, speaking at an annual conference of the Society for International Development, said: “We have now achieved a more competitive exchange-rate structure.” Some traders interpreted that as a signal that Volcker felt the dollar had fallen far enough.

“Today in the morning the sentiment was very bearish for the dollar so the dollar was sold against the yen,” said Wataru Yamamoto, manager of foreign exchange at the Fuji Bank here. “But after that we had news that Volcker said we have a more competitive exchange rate. After that news, we climbed up.”