CURRENCY : Dollar Strong Despite Central Banks’ Selling

The dollar surged Tuesday despite continued efforts by central banks in Europe and the United States to restrain its rise.

Gold prices were mixed. Republic National Bank of New York said gold was bid at $431.85 an ounce as of 4 p.m. EDT, down from $433.20 an ounce late Monday.

The official attempts to hold down the dollar were lighter than Monday, but still significant, traders said.

Among the central banks that sold dollars were those of the United States, West Germany, Britain, France, Canada, Belgium and Austria, said Stephen Leach, a currency analyst for Chemical Bank. He said the intervention reached from Asia to Europe to the United States.

“The intervention knocks down the dollar, but only temporarily,” Leach said. “The market is convinced that the dollar can only go higher at this stage.”

Leach said the Federal Reserve’s credibility in knocking down the dollar was impaired by other steps that it took Tuesday to drain reserves from the banking system. That in effect “sterilized” the intervention by soaking up dollars from the market.

“Sterilized intervention isn’t going to do the trick,” Leach said.

Supporting the dollar are relatively high U.S. interest rates, which increase the attractiveness of dollar-denominated securities.

The dollar rose to 133.93 Japanese yen in Tokyo from 133.88 yen late Monday. Later in London the dollar closed at 133.86 yen. At the close of trading in New York the dollar rose to 134.11 yen from 133.63 yen late Monday.

The dollar weakened in London. It took $1.6795 to buy a pound, up from $1.6767 late Monday. Later in New York, the dollar strengthened. It took $1.6740 to buy a pound, down from $1.6860 late Monday.

Other late dollar rates in New York, compared to late rates Monday, included: 1.9128 West German marks, up from 1.9068; 1.6102 Swiss francs, up from 1.6075; 1.2308 Canadian dollars, up from 1.2285; 6.4895 French francs, up from 6.4680, and 1,415.75 Italian lire, up from 1,412.00.

Late dollar rates in Europe, compared to Monday: 1.9060 West German marks, down from 1.9190; 1.6055 Swiss francs, down from 1.6105; 6.4635 French francs, down from 6.5050; 2.1440 Dutch guilders, down from 2.1605; 1,407.50 Italian lire, down from 1,417.00, and 1.2303 Canadian dollars, up from 1.2291.

In Hong Kong, gold prices rose to $434.59 an ounce from $432.01 late Monday. Later in Europe, gold rose in London to $432.75 an ounce from $432.00 and rose in Zurich to $433 an ounce from $431 late Monday.

On the Commodity Exchange in New York, gold bullion for current delivery fell to $432.20 an ounce from $433.60 late Monday.

The price of silver rose in London to $6.74 an ounce from $6.64 an ounce late Monday. On New York’s Comex, silver bullion for current delivery closed unchanged at $6.730 an ounce.

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