Newspaper article THE JOURNAL RECORD

Dollar Slumps for Third Day-in-Row / Gold Prices Jump Sharply

Newspaper article THE JOURNAL RECORD

Dollar Slumps for Third Day-in-Row / Gold Prices Jump Sharply

Article excerpt

NEW YORK (AP) - The dollar fell for the third straight day Wednesday despite central bank intervention, hitting three-month lows against the West German mark and Japanese yen in active trading.

Gold prices jumped more than $10 an ounce, which traders linked to the dollar's drop and heightened hostilities in the Persian Gulf. Republic National Bank in New York quoted gold at $465 a troy ounce as of 4 p.m. EDT, compared with $454.75 late Tuesday.

Foreign exchange brokers said the Federal Reserve, West German Bundesbank and Swiss National Bank bought modest amounts of dollars to support its value, which has been eroding since Monday. But the stabilizing effect was only temporary.

``I know there's been some intervention and obviously it's not very convincing to the marketplace,'' said James Chorek, a currency analyst at Money Market Services in Chicago.

Toshihiko Masaki, a currency dealer at the New York office of Japan's Sanwa Bank, said there was heavy selling of dollars by large institutional investors, which helped accelerate the currency's slide.

Masaki also said there was considerable uncertainty about whether central banks would intensify their intervention and that ``most people in the market are very nervous.''

Others said the overwhelming sentiment was that the dollar will have to fall further until the large U.S. trade deficit starts to narrow significantly. A cheaper dollar makes exports more competitive and imports more expensive.

In Tokyo, the dollar closed at a three month low of 141.13 Japanese yen, down from 141.60 yen Tuesday. Later in London the dollar rose slightly to 141.15 yen, but in New York the dollar fell to 140.85 yen, down from 141.45 yen Tuesday. It was the lowest closing against the yen in New York since late May. …

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