CURRENCY : Dollar Heads Down in U.S., Up in Europe

The dollar stabilized at lower levels Friday, but traders said continued selling pressure was evidence that the currency may not have hit bottom yet.

The dollar closed near the lows of the day in domestic trading, finishing out a week that saw the U.S. currency plunge by as much as 2.5% against some key currencies to levels not seen for 40 years.

Gold prices were mixed. Republic National Bank in New York reported a late bid for gold of $469 an ounce, up from Thursday’s late bid of $466.50 an ounce.

The dollar’s poor performance in domestic trading was described by traders exhausted by the week’s chaotic downward slide as “just a continuation of the trend.”

Rumors swirled through currency markets that finance ministers from some of the world’s leading industrialized democracies would meet soon to discuss exchange rates.

But West German Finance Minister Gerhard Stoltenberg denied that such a meeting was planned, saying a hasty gathering would raise problems of its own.

“If they’re not going to meet, that’s giving tacit approval to a lower dollar,” said John McCarthy, a vice president of foreign exchange at Irving Trust Co., a New York bank.

“The market took that as one more barometer that the dollar must come lower,” he said. “It’s just giving the market more reason to sell dollars.”

Trading in New York was not particularly active, but dealers noted that the dollar ricocheted in a narrow trading band.

In New York trading, the dollar rose slightly to 138.35 yen from 138.30 on Thursday, while theBritish pound closed at $1.7225, compared to $1.7170. Other late dollar rates in New York included: 1.7285 West German marks, down from 1.7348; 1.4283 Swiss francs, down from 1.4353; 5.8785 French francs, up from 5.4870; 1,275.00 Italian lire, down from 1,276.75, and 1.3158 Canadian dollars, down from 1.3179.

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