Fed Intervenes To Curb Dollar; It Buys Marks
The U.S. government took modest action to slow the rise of the dollar. But officials indicated the move was largely symbolic and didn't reflect a commitment to stop further increases in the currency.</br></br>The U.S. intervention in currency markets occurred yesterday morning, when the Federal Reserve sold a small amount of dollars in exchange for West German marks. The move helped slow the rally that has carried the dollar sharply higher in the past week.</br></br>U.S. officials indicated that the Fed's action was intended as a show of support for the West German central bank, whose leaders fear further increases in the dollar could boost inflation in their country.</br></br>But U.S. officials remain generally satisfied with the recent rise in the dollar. At the Fed, in particular, it is seen as a sign that foreign investors are growing convinced of the central bank's determination to fight inflation. Fed officials have no intention, for now, of undertaking large-scale intervention to stop the dollar's ascent.</br></br>New York currency dealers described yesterday's intervention as modest. They said the Federal Reserve Bank of New York entered the market in the morning when the dollar was trading at a little above 1.8200 West German marks and sold several banks between $10 million and $15 million each. Traders estimated the Fed's total sales at between $200 million and $300 million, enough to move the market but not have a lasting impact.