EUROPE’S CURRENCY CRISIS : ‘I’ll Buy 100’--the Rates Shift : Money: Frenetic dealers in London banks trade currencies worth billions in second day of European financial crisis.

The scene in Chase Manhattan Bank’s London dealing room was frenetic yet controlled Thursday: Young men and women, jackets slung over the backs of chairs, stared into a bank of computer screens, one, sometimes two, telephones clasped to their ears.

Clocks on the wall ticked away the time in New York, Bahrain, Sydney, Hong Kong and Tokyo.

The sometimes-shouted language was incomprehensible code:

“Seventeen, 20 on 4. . . .”

“I’ll buy 100 at 2.65. . . . “

“Ninety, 95, you got it. . . .”

“We’ve done it at 10. . . . “

The dealers were buying and selling currencies, with tiny national flags above their desks denoting which funds they were swapping. But most were selling the British pound in the second day of a national and European-wide financial crisis. The clients they were talking to from all around the world were trying to dump pounds and get deutschemarks and dollars.

When the dust settled late Thursday, currencies worth billions of dollars had changed hands in dealing rooms at Chase and the major London banks in the heart of London’s financial district, known as The City.

In the low-ceilinged room--its raised floor carries miles of cables needed to service the ranks of computers--Chase chief economist Robin Marshall explained:

“It has become clear: The financial markets have forced a decision on the British government and it has had to break away from the Exchange Rate Mechanism,” he said, referring to the agreement among 11 of the European Community’s 12 member nations to keep their currencies within a specified range of values.

“I’ve never seen such a capital flow. Last week, the Bundesbank spent 25 billion marks to support the lira and yesterday (Wednesday), the Bank of England, I’d reckon, spent 10 billion pounds to support sterling--that’s half the currency reserves in the United Kingdom.”

The Bundesbank is Germany’s central bank, and the Bank of England is Britain’s. Both have a role similar to that of the Federal Reserve Bank in the United States.

Glancing again at his number-filled computer screen, Marshall added: “This is how the market works: When the market sees central banks failing to hold the line on behalf of lira or sterling, they’re going to sell it.”

Like other experts in the financial markets, Marshall has his doubts about how soon Britain will rejoin the European Community’s exchange rate system, which seeks to cushion the impact of market volatility by obliging member governments to act in support of their currencies.

Britain and Italy both found themselves unable to keep the value of their currencies within the system’s specified range and withdrew from it Wednesday. Both said they would return as soon as the markets have calmed down.

But Marshall said he wonders whether that is advisable for Britain. He noted that the main concern of the average Briton during Wednesday’s financial turmoil was an announced 50% increase in the key interest rate, later cut back to a 20% increase. For a day, though, Britons had faced the imminent prospect of higher mortgage rates and damage to their faltering economic recovery.

But on Thursday, Britain reversed itself, bringing the interest rate back to the 10% level of Tuesday and allaying homeowners’ fears. That led to a 100-point jump in London’s stock market.

Many businessmen were bitter at the government’s vain effort to support the pound, which led to the two announced jumps in the key interest rate. But they welcomed Thursday’s return to the earlier level.

As an official at the Institute of Directors put it: “We are delighted the rate has been cut back to 10%. Now is the time to take the bull by the horns and announce a further two (percentage point) cut in interest rates before we consider going back into the Exchange Rate Mechanism.

“There are a large number of pluses in the situation we have now. Exports are going to be cheaper, imports dearer, and we could soon find sterling moving back up in value.”

Back at the beige-painted, red-carpeted Chase Manhattan dealing room, Marshall voiced a view widely held in British government and financial circles that Germany and its Bundesbank were responsible for the disastrous run on the pound sterling.

“Germany has pursued a domestically appropriate policy,” he said. “But what is appropriate for Germany domestically is inappropriate for the U.K. (United Kingdom) domestically. And since we were all locked into the mark, there is an awful lot of acrimony against the Germans in Europe.”

The chairman of the governing Conservative Party, Norman Fowler, went as far as to call for the resignation of Bundesbank President Helmut Schlesinger, whose remarks about the pound’s health some British officials hold responsible for triggering the chaos Wednesday.

Officials at No. 10 Downing Street, speaking on behalf of Prime Minister John Major, listed what they called a series of miscues by the Bundesbank and German financial circles that undermined sterling, even as Chancellor of the Exchequer Norman Lamont and the Bank of England were spending billions to buy pounds in an unavailing effort to prop it up.

In their view, German blundering began with the Bundesbank raising interest rates to help pay for eastern Germany’s reconstruction. The increases tended to attract money to the German mark and away from other currencies, undermining their value. That in turn forced some nations to raise their own rates or keep them uncomfortably high, threatening their economic recoveries.

German maneuvering, in this view, was topped by a disappointingly small lowering of its key interest rates--Monday’s cuts of 0.25 to 0.5 percentage points. Germany’s neighbors had expected a much larger reduction.

Then on Tuesday, the Wall Street Journal and the German financial weekly Handelsblatt each carried a report of an interview with Schlesinger in which he suggested that the pound was overvalued. That triggered heavy selling of sterling.

A measure of the hard feelings among influential Britons against Germany’s recent financial behavior was reflected Thursday by Marcus Fox, spokesman for Conservative members of Parliament:

“The majority of British people will believe that the Germans have not changed at all. All they look at is their own national interest.”