Dollar Dips Below 150-Yen Level Abroad

The dollar slid below the key 150-yen level in slow European trading Wednesday on growing speculation that U.S. interest rates are headed lower.

The dollar closed in London at 149.70 Japanese yen, compared with 150.95 at the close in New York Tuesday, and at 1.6465 German marks, compared with 1.6505 Tuesday in New York.

In Tokyo, the dollar fell to 150.30 Japanese yen from 151.68 on Tuesday. It edged up, however, in early today. A dealer with Sumitomo Bank said after the opening that the dollar moved between 150.80 and 150.90 yen as institutional investors bought the currency.

U.S. currency markets were closed Wednesday for the July 4 holiday.

Some Tokyo traders predicted that the dollar would fall gradually but not dramatically without new market-moving news.

“I don’t really see the dollar going into a free fall,” said Akio Nakano, manager at Long-Term Credit Bank. “Sentiment is weak, but the market is cautious. It will be a slow, gradual decline.”

The dollar has been under pressure on expectations of easier credit in the United States. Anticipation of lower rates was fueled Tuesday after President Bush said that bringing interest rates down worldwide remained a policy goal.

Lower U.S. interest rates make dollar-bearing assets less attractive versus other foreign currencies that may have higher interest rates.

“It’s an interest rate-led market,” said Yuichi Sugiura, manager at Sanwa Bank.