Dollar Slide Continues Despite Intervention; Gold Prices Surge

The dollar fell for the third straight day Wednesday despite intervention by central banks, hitting three-month lows against the West German mark and Japanese yen in active trading.

Gold prices jumped more than $10 an ounce, which traders linked to the dollar’s drop and heightened hostilities in the Persian Gulf. Republic National Bank in New York quoted gold at $465 an ounce, compared to $454.75 late Tuesday.

Foreign exchange brokers said the Federal Reserve, West German Bundesbank and Swiss National Bank bought modest amounts of dollars to support its value, which has been eroding since Monday. But the stabilizing effect was only temporary.

“I know there’s been some intervention, and obviously it’s not very convincing to the marketplace,” said James Chorek, a currency analyst at Money Market Services in Chicago.

In Tokyo, the dollar closed at a three-month low of 141.13 Japanese yen, down from 141.60 on Tuesday. Later in London, the dollar rose slightly to 141.15 yen. But in New York, the dollar fell to 140.85 yen from 141.45. It was the lowest closing against the yen in New York since late May.

Meanwhile, the Japanese news agency Kyodo reported that Satoshi Sumita, governor of the Bank of Japan, plans to ask Federal Reserve Board Chairman Alan Greenspan to strengthen U.S. intervention to support the dollar. The report said Sumita planned to tell Greenspan that a weak dollar is jeopardizing Japan’s attempts to expand its domestic demand. The heads of the two central banks are scheduled to attend a general meeting of the Bank for International Settlements in Switzerland early next week.

The dollar fell to 1.8085 West German marks in Europe from 1.8115 on Tuesday. Later in New York, the dollar broke through the psychologically important 1.80-mark level for the first time since early June to close at 1.7973, down from 1.8090.

The British pound rose in London for the fifth straight market day to $1.6510 from $1.6400 late Tuesday. Later in New York, the pound was quoted at $1.6531, down from $1.6430.

Other late dollar rates in New York, compared to late Tuesday, included: 1.4838 Swiss francs, down from 1.4950; 1.3143 Canadian dollars, down from 1.3174; 6.0145 French francs, down from 6.0600, and 1,301.20 Italian lire, down from 1,310.50.

On the Commodity Exchange in New York, gold bullion for current delivery jumped $10.50 an ounce to $465.30. Earlier in London, gold rose to $462.50 from $453. In Zurich, gold rose to $464 from $454.

In Hong Kong, gold rose to $456.64 from $453.09.