Dollar Holds Steady as Banks Intervene Again --- Test of Nations' Resolve To Aid U.S. Currency Is Expected Next Week
The dollar was steady to slightly lower in light trading that quieted still further after an early round of intervention by as many as eight central banks.</br></br>Currency dealers predicted the market merely will go through the motions of trading in today's last session of 1987. But they expect a rapid return to full-scale activity Monday, with traders poised to sell dollars and test the central banks' determination to continue supporting the U.S. currency's value.</br></br>Yesterday's intervention was the third consecutive day the U.S. Federal Reserve, the Bank of Japan and the West German Bundesbank had been reported buying dollars in the market. Traders said the three were joined during European trading by the central banks of France, Italy, Switzerland, Belgium and Austria.</br></br>Only the Swiss central bank announced its action; the others declined to confirm or deny reports of their activities.</br></br>The scale of the intervention remained relatively modest and appeared aimed only at keeping the dollar steady in the thin market. Earl I. Johnson, vice president, Harris Trust & Savings Bank, Chicago, said the total of all the banks' dollar purchases was probably less than $500 million in a market of $100 billion or more. A European bank official estimated that the Bundesbank bought $200 million to $250 million, the Fed bought $100 million to $150 million, and the others intervened in token quantities.