Dollar Is Mixed As Most Banks Hold Off Sales --- Japanese Yen Strengthens, But West German Mark, Sterling Post Decline
The U.S. dollar fell against the Japanese yen yesterday but firmed against the West German mark and the British pound in a late-day, short-covering rally that took place in the absence of major central bank intervention.</br></br>Yesterday was the first trading day since Monday that the Bank of Japan and other major central banks, including the U.S. Federal Reserve, didn't intervene to any great extent in the foreign-exchange market. The interventions began after finance ministers from the Big Five industrialized nations -- the U.S., Japan, West Germany, Britain and France -- agreed Sunday on a program aimed at lowering the dollar's value.</br></br>The West German central bank spent $55.8 million yesterday at the official Frankfurt fixing, which was less than the $82 million spent by the bank the day before as the dollar was weakening substantially. The Bank of France also sold dollars yesterday, for the second successive day, to support the French franc, which has been hurt by the political problems of the French Socialist government. But the sales were described as minimal.</br></br>The British pound declined 2% against the dollar despite a new Iraqi air attack that crippled Iran's oil terminal on Kharg Island in the Persian Gulf.</br></br>Ordinarily, anything that might put upward pressure on oil prices would help the pound, as Britain derives a large share of its foreign-exchange earnings from its own North Sea oil production.