CURRENCY : Dollar Falls as Hope for G-7 Support Deal Fades

The dollar declined Thursday in slack trading ahead of a meeting next week of leading industrial nations, while the British pound resumed its climb.

The dollar finished lower against most major currencies Thursday, as transitory hopes of an international agreement to support the U.S. currency faded.

Gold prices rose slightly. Republic National Bank of New York quoted a bid price for gold of $448.85 an ounce as of 4 p.m. EDT, up from $448.25 late Wednesday.

The dollar had risen earlier in the week, propped up by news reports that finance ministers of the seven major industrialized countries were likely to set a floor for the U.S. currency at a meeting next week. The advance continued Thursday in the Far East and Europe, but later ran out of steam in New York, as a modicum of bearish dollar sentiment returned.

The Group of Seven, due to meet next Wednesday, comprises the United States, Britain, Japan, West Germany, France, Italy and Canada.

Currency dealers noted that the dollar’s decline was moderate and trading was fairly light.

“The dollar was fairly firm,” said Dan Holland, a trader for Discount Corp. in New York.

He said the currency’s fall was cushioned somewhat by encouraging remarks on the nation’s trade deficit by U.S. Trade Representative Clayton K. Yeutter. The dollar has been hammered in recent months by negative news on the trade deficit--which has indicated to traders that the currency might have to fall further in order for U.S. exports to be sufficiently competitive.

Besides the Group of Seven meeting, currency dealers also are looking toward the April 14 release of U.S. trade data for February.

“There wasn’t much of a dollar move today, all else was sterling related,” said a dealer.

The pound has been reaching new highs routinely in recent weeks but opened lower in New York against Wednesday’s close. It quickly rebounded, however, after the Bundesbank and Bank of England central banks intervened and pushed sterling down to levels corporations found attractive, dealers said.

“The market tried to pick a top for sterling, but a large buyer came in as it moved back down and forced everyone at the top to cover short positions,” Holland said.

Sterling has been luring investors because Britain’s relatively high interest rates promise greater returns. In addition, many traders believe that the British government will allow the pound to rise as an anti-inflation technique.

In London, the dollar rose against the British pound. It cost $1.8670 to buy one pound, cheaper than $1.8790 late Tuesday. But later in New York, the pound rose to $1.8756 from $1.8716 late Wednesday.

In Tokyo, where trading ends before Europe’s business day begins, the dollar rose 0.67 Japanese yen to a closing 125.70 yen. Later, in London, it was quoted fractionally higher at 125.85 yen. At the end of the trading day in New York, the dollar was quoted at 125.72 yen, down from 126.03 yen late Wednesday.

Other late dollar rates in New York, compared to late Wednesday’s rates, included: 1.6775 West German marks, down from 1.6790; 1.3864 Swiss francs, down from 1.3893; 5.6885 French francs, down from 5.6925; 1,243.75 Italian lire, up from 1,243.12, and 1.2483 Canadian dollars, up from 1.2416.

Other late dollar rates in Europe, compared to late Wednesday’s rates, included: 1.6810 West German marks, up from 1.6700; 1.3897 Swiss francs, up from 1.3775; 5.7022 French francs, up from 5.6570; 1.8865 Dutch guilders, up from 1.8720; 1,246.50 Italian lire, up from 1,236.50, and 1.2448 Canadian dollars, up from 1.2401.

On the Commodity Exchange in New York, gold bullion rose to $450.80 an ounce from $449 late Wednesday.

In London, gold dropped to a late bid price of $447.75 an ounce, down from $449.50 late Wednesday. In Zurich, Switzerland, gold also fell to a late bid of $448.00 an ounce, down from $449.50 late Wednesday.

Earlier, in Hong Kong, gold fell $5.56 an ounce to close at a bid of $447.65. Silver was quoted in London at a bid price of $6.40 an ounce, down from late Wednesday’s $6.57.

On New York’s Comex, silver bullion for current delivery fell to $6.407 an ounce from $6.570 late Wednesday.