Dollar Tumbles 2.5 Percent Against Yen, Pound, Mark; Crisis of Confidence Blamed for Decline
In what analysts called the biggest single-day drop in years, the dollar plummeted today as traders who had been powering the currency's long rally suffered a sudden crisis of confidence.</br></br>Market watchers said there was no apparent fundamental news to account for the dollar's drop, which amounted to 2.5 percent or more against the British pound, West German mark and Japanese yen.</br></br>Instead, traders said the dollar appeared to have risen too far, too fast in recent weeks and may have been ripe for a selloff by speculators anxious to cash in their gains.</br></br>"It was just inevitable we would reach some level where there were just no more buyers and the sellers would gain the advantage," said Bob Giordano, chief dealer at Bank Leumi Trust Co. in New York.</br></br>Analysts say a market rally often breaks when market sentiment is strongest that the advance is unstoppable, because there is no one left to persuade and therefore no fresh cash available to enter the market.