Dollar Drops Against Most Key Currencies

The dollar slid lower against most major currencies in brisk trading Wednesday, buffeted by continued speculation that the major industrial nations are not prepared to coordinate efforts to halt its decline.

Gold prices fell. Republic National Bank of New York quoted a bid price for gold of $410.20 an ounce at 4 p.m. EST, down from $415 late Tuesday.

The dollar finished below the key level of 1.80 West German marks in both U.S. and European trading. Traders consider the 1.80-mark level an important psychological barrier that helps cause the dollar to drop against other currencies, as well. On Tuesday, it dropped below that level in New York for the first time since 1979.

And the U.S. currency also tumbled against the franc, dropping below 6 to the dollar--trading in New York late Wednesday at 5.94.

Speculation on Support

The dollar was pushed and pulled Wednesday by speculation on whether the “Group of Five” industrial nations--the United States, Britain, West Germany, France and Japan--would mobilize and take measures to support the faltering U.S. currency.

The expectation that the G-5 finance ministers and central bankers would confer soon was fueled by a rumor that Secretary of the Treasury James A. Baker III had left Washington for an emergency meeting of the group. Traders said the dollar was boosted sharply by the rumor, which reached the currency markets shortly before noon EST. But the American currency was soon driven down again, dealers said, when a Treasury official denied that Baker had left for G-5 talks.

In an exception to Wednesday’s pattern, the dollar edged up against the Japanese yen. In Tokyo, where trading ends before Europe’s business day begins, the dollar fell for the third straight session to 151.20 yen, down from 151.95 Tuesday. Later, in London, the dollar was lower at 150.40 yen. But the dollar finished in New York at 151.45 yen, up from 151.12 yen late Tuesday. The British pound, meanwhile, was selling at its highest level against the dollar in London since June 13, 1983.

Despite new official figures showing that Britain had a record merchandise trade deficit last year equivalent to around $13 billion, one British pound exchanged in London late Wednesday at $1.5470, more expensive for buyers than $1.5310 late Tuesday. Later in New York, the pound fetched $1.5410 vs. $1.5380 late Tuesday.

Selected late dollar rates in New York, compared with Tuesday’s close, were: 1.7795 West German marks, down from 1.7975; 5.9400 French francs, down from 6.0110; 1.4935 Swiss francs, down from 1.5085; 1,272.00 Italian lire, down from 1,279.00, and 1.3403 Canadian dollars, down from 1.3427.

Gold bullion closed in London at a bid price of $408.80 an ounce, down from $411.40 Tuesday. The late price in Zurich was $411.00 bid, down from $411.50. Hong Kong markets were closed for the Chinese Lunar New Year.