CURRENCY : Banks’ Buying Does Little to Impede Slide by Dollar

The dollar continued to fall Tuesday against all major currencies in cautious trading despite reports of some central bank intervention.

Gold prices rebounded. Republic National Bank’s late quote was $418 an ounce, up $2.50.

Currency dealers reported that the Federal Reserve bought modest amounts of dollars with Japanese yen throughout the session, but they said the intervention had only limited impact on the bearish market.

“There’s a preponderance of (dollar) selling,” said George DeLuna, a vice president and trader at Irving Trust Co.

Traders have become increasingly worried about the lingering trade and budget deficits and their ultimate effect on the economy.

At issue is whether President-elect George Bush, who has vowed not to raise taxes, and the Democrat-controlled Congress can agree on necessary spending cuts.

Bush told a gathering of Republican governors Tuesday in Point Clear, Ala., that he considered the deficit a pressing problem and promised to “work constructively” with Congress. He said he planned to name budget negotiators to represent the executive branch during his first day on the job.

Pound Gains in London

But DeLuna said, “The market is looking for something more specific,” and without that, the dollar will remain weak.

Dealers said they expected fairly quiet trading this week because of a Japanese holiday today and the Thanksgiving holiday in the United States.

In Tokyo, traders said the Japanese central bank made occasional dollar purchases Tuesday, but the dollar fell 0.74 yen to a closing 121.78 yen. The dollar was quoted at 121.75 yen in London, and fell in New York to 121.315 yen from 122.025 yen late Monday.

In London, the British pound jumped to a five-month high of $1.8305 from $1.8175 late Monday. Later in New York, sterling fetched $1.83375, up from $1.8235.

Other late dollar rates in New York, compared to late Monday, included: 1.71855 West German marks, down from 1.72815; 1.44575 Swiss francs, down from 1.45495; 1.2008 Canadian dollars, down from 1.20695; 5.8765 French francs, down from 5.9070, and 1,277.50 Italian lire, down from 1,284.575.

Gold bullion prices were boosted by the weaker dollar and higher oil prices, dealers said.

Silver Higher

On the New York Commodity Exchange, gold for current delivery rose to $417.70 an ounce from $415.80 late Monday.

In London, gold rose to a late bid of $419.65, up from $416.75 bid late Monday. Gold rose in Zurich, Switzerland, to $418.90 from $416.50.

Earlier, in Hong Kong, gold fell 75 cents to a closing bid of $418.04 an ounce.

Silver prices gained ground. On the Comex, silver bullion rose to $6.061 an ounce from $6.010. It rose in London to a late bid of $6.11, up from $6.04.