Central Banks Help the Dollar Regain Ground --- Buying by U.S., Japan Spurs A Rebound, but Traders Say Further Fall Likely
Continuing intervention by the Bank of Japan and the U.S. Federal Reserve helped the dollar recover much of its Monday loss.</br></br>The dollar purchases by the two central banks, combined with buying by commercial bank dealers covering short, or oversold, dollar positions, boosted the U.S. currency. The dollar was quoted at 125.25 Japanese yen in late New York trading, up 1.2% from 123.75 late Monday. The dollar also climbed 0.8% to 1.6690 West German marks from 1.6553.</br></br>In trading in Tokyo Wednesday, the dollar opened at 125.75 yen.</br></br>Dealers speculated that the intervention and short-covering might be enough to stabilize the dollar as trading slackens ahead of the Easter weekend. But the downward pressure on the dollar is far from dissipated, they said.</br></br>"We still have the (U.S.) trade deficit, and we're not getting out of the hole that easily," Jose Gonzalez, foreign exchange manager at National Bank of Detroit, said. Mr. Gonzalez said the dollar's recovery yesterday was "a bit of a consolidation" because "the market doesn't want to go too far too fast."