Dollar Falls on Report of Rise in Jobless Rate

The dollar plunged against major foreign currencies, falling below two West German marks, in late European trading today after the U.S. government reported that unemployment jumped to 7% in September.

Gold bullion finished higher despite some profit-taking.

The dollar, which fluctuated within a narrow range during the morning in Europe, headed downward after the Labor Department said the unemployment rate rose by 0.2 percentage point last month.

Analysts said the report was taken as evidence of sluggish manufacturing and indicated that economic expansion may not be as robust as some had thought when unemployment levels dropped for a third straight month in August.

Traders in Frankfurt said there was no sign of intervention by West Germany’s central Bundesbank in support of the dollar. The apparent lack of intervention further undermined the currency, they said.

By late afternoon, the dollar had steadied but remained below levels of late Thursday.

The dollar finished at 1.9965 West German marks in Europe, down from 2.0065.

Selected afternoon dollar rates, compared to levels in Europe late Thursday were: 1.6155 Swiss francs, down from 1.6352; 6.5365 French francs, down from 6.6035; 2.2555 Dutch guilders, down from 2.2775; 1,380.875 Italian lire, down from 1,393.50, and 1.38675 Canadian dollars, down from 1.3873.

The dollar closed in Tokyo at 154.06 Japanese yen, down only slightly from 154.33 yen Thursday and 154.43 yen last Friday. In London this afternoon, the dollar was quoted at 153.78 yen.

The British pound rose to $1.44225 from $1.4360 late Thursday.