The dollar's value swung sharply Wednesday and ended mixed against major currencies in hectic foreign exchange trading, influenced by conflicting rumors and coordinated central bank intervention.
Gold prices also were mixed, falling in Asia, rising in Europe and falling in the United States. Republic National Bank of New York quoted gold at $479.80 an ounce as of 4 p.m. EST, down from $480.75 at the same time Tuesday.
The dollar slipped sharply in Tokyo following news reports that Japanese Finance Minister Kiichi Miyazawa denied the existence of dollar-yen target ranges, which initially was reported in the Japanese press last week as part of an alleged secret pact between Japan, the United States and West Germany.
Dealers also sold dollars because they were alarmed at the prospect that the United States might report a worsening trade deficit for November on Friday, which likely would put intense pressure on the U.S. currency.
The dollar's slide was reversed later in Europe when the central banks of the United States, Britain, West Germany, Switzerland, Italy, France and Austria all entered the market at various times to buy dollars.
By the time trading concluded in New York, there were enough contradictory rumors about central bank intentions and the dollar's direction that the currency was down against the Japanese yen and British pound but up against the West German mark and other key European currencies. Many brokers expressed exasperation with the dollar's unpredictable behavior.
"It was a very hectic market today," said Toshihiko Masaki, a foreign-exchange trader for the New York office of Tokyo-based Sanwa Bank.
Zlatko Glamuzina, chief dealer at Banco di Sicilia's New York branch, attributed the dollar's volatility to confusion injected into the market intentionally by central banks.
"Basically what happened is the central banks are running a misinformation campaign to shake the speculators out of the market," he said. "It's very effective intervention. If I were an old poker player that knew his stuff, I'd do it that way."
In Tokyo, the dollar closed at 126.30 Japanese yen, down from 128 yen. Later, in London, it eased to 126.25 yen. By the time trading closed in New York, the dollar was trading at 127.23 yen, down from 127.45 yen late Tuesday.
The British pound rose in London to $1.8260 from $1.8220 late Tuesday. Later in New York, the pound was quoted at $1.8222, more expensive than the $1.8215 quoted late Tuesday.
Other late dollar rates in New York compared to levels late Tuesday included: 1.6383 West German marks, up from 1.6340; 1.3355 Swiss francs, up from 1.3340; 1.2871 Canadian dollars, up from 1.2843; 5.5175 French francs, up from 5.5165; and 1,203.35 Italian lire, up from 1,201.37.
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