CURRENCY : Dollar Advances Despite Action by Central Banks

From Associated Press

The dollar advanced broadly during a busy session Tuesday despite efforts by central banks to check its movement.

Gold prices sank. Republic National Bank of New York quoted a late bid of $383 an ounce, down $7 from Monday’s late bid.

Victor Polce, a vice president at Bear, Stearns & Co., said traders bought dollars actively throughout the day, undeterred by central banks selling dollars in a concerted round of intervention.

“I think the intervention did absolutely nothing,” Polce said. “Traders were saying ‘Give me some dollars, make my day’ because they believed they would be able to sell them higher in the future.”


Foreign exchange dealers in Europe said the U.S. currency recovered quickly from concerted dollar selling by the central banks of West Germany and other countries. Traders estimated that the central banks sold nearly $200 million.

The absence of the influential Bank of Japan from the markets may have caused currency dealers to ignore what the other central banks were doing.

“Traders are getting tired of the old names,” Polce said. “They really want to see the Bank of Japan in the market.”

In London, one British pound cost $1.7030 late Tuesday, cheaper for buyers than Friday’s $1.7190. Later in New York, sterling fetched $1.6855, compared to $1.7085 on Monday.


Earlier in Tokyo, the dollar closed at 132.30 Japanese yen, up 0.60. The dollar traded higher at 132.48 yen in London and at 133.105 yen later in New York.

Gold bullion prices sagged by about $7 an ounce in active European trading.

On the Commodity Exchange in New York, gold bullion for current delivery closed at $383, down from $391.10. Gold closed in London at a bid of $387.50, down from $394.75. The Zurich closing bid price was $388, down from $395.

Traders said the price fell sharply with the start of selling in the New York market. They said the dollar’s strength in the face of central banks selling the U.S. currency and lower prices for crude oil in New York helped to drive down the price of gold.

Earlier in Hong Kong, gold closed at $392.64 bid, down from $396.14.

Silver bullion traded late in London at a bid of $5.91, down from $6.08. On New York’s Comex, silver bullion for current delivery finished at $5.794 an ounce, down from Monday’s $5.946.