CURRENCY : Dollar Edges Higher Despite Late Selloff

NEW YORK â€”  The dollar finished mostly higher against foreign currencies in U.S. trading Wednesday despite a late selloff incited by rumors of aggressive central bank intervention, currency brokers said.

Gold prices eased further in New York after falling sharply in Europe. Republic National Bank’s late quote for bullion was $435.30 an ounce, down from $437.20 Tuesday.

Money traders have attributed the dollar’s persistent rise in value during the past several days to an increasing perception that the major industrialized democracies are willing to tolerate a more expensive U.S. currency.

But the dollar’s growing attractiveness in foreign exchange markets was dampened somewhat Wednesday after Japan’s central bank governor Satoshi Sumita said Tuesday in Tokyo that he was ready to stem the rise if necessary.

Rumors also spread that other central banks sold dollars late Wednesday, concerned that the U.S. currency quickly was becoming overvalued. The rumors sent some money traders scurrying to sell dollars.

Pound Falls

“Today was kind of a mixed day,� said Arthur Liming, money market analyst at LNS Financial Group Inc. in Chicago. “Most people kind of took a chance to sit back and look at what’s been transpiring. They’re trying to decide whether the central banks are trying to stem rise of dollar or make sure the rise doesn’t get out of hand.�

In Tokyo, the dollar broke the 133-yen level for the first time in nearly seven months before retreating to 132.40 yen, up 1.45 from Tuesday. In London, it was quoted later at 133.70 yen. Later in New York the dollar closed at 132.93 yen, up from its 132.74-yen close on Tuesday.

The British pound fell sharply in London to $1.7060 from $1.7200 late Tuesday but recovered partly in the United States. The pound fetched $1.7132 in late New York trading, up from $1.7085 late Tuesday.

Other late dollar rates in New York, compared to late Tuesday’s rates, included: 1.8225 West German marks, up from 1.8220; 1.5118 Swiss francs, up from 1.5080; 1.2147 Canadian dollars, up from 1.2097; 6.1375 French francs, up from 6.1340, and 1,351.00 Italian lire, down from 1,352.50.

Late dollar rates in Europe, compared to late Tuesday’s rates, included: 1.8290 West German marks, up from 1.8070; 1.5155 Swiss francs, up from 1.4960; 6.1635 French francs, up from 6.0885; 2.0545 Dutch guilders, up from 2.0210; 1,350.75 Italian lire, up from 1,337.00, and 1.2173 Canadian dollars, up from 1.2105.

Dealers said the dollar’s resilient strength was the main reason for the slide in gold prices.

On the Commodity Exchange in New York, gold bullion for current delivery settled down $2.30 an ounce to $435.70. Earlier in London, gold tumbled nearly $10 to $433.30, against $443.20 late Tuesday. In Zurich, Switzerland, gold dropped to $433.50 an ounce $443.20 late Tuesday. In Hong Kong, gold fell $6.26 to close at $440.04.

Silver bullion prices fell in tandem with gold. Silver traded at $6.66 an ounce in London, down from $6.92 Tuesday.

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