The dollar showed unexpected strength against most currencies yesterday after a shaky start which sent it to a record low against the yen and below 2 German marks.
The rejection of a tentative contract by U.S. coal miners - and President Carter's subsequent decision to involve antistrike provisions of the Taft-Hatley Act - appeared to have little impact on the dollar, dealers said.
In Tokyo, the first major foreign exchange to open, the dollar sank to a record low 235.05 yen despite massive purchases by the Bank of Japan, estimated at $500 million. Dealers in Tokyo pointed to the prospect of a continuing coal strike and the big U.S. trade deficit in January. But the end of the trading day in Tokyo the dollar recovered slightly to 235.20 yen.
On European exchanges, the dollar opened lower against the German mark but stronger against the Swiss franc. The dollar dipped below 2 marks again, but later recovered strongly to nearly 2.05 marks.
The dollar opened at 1.9955 German marks, but later rose on speculation that West Germany might take foreign exchange control steps similar to those adopted by Switzerland. The Swiss moves succeeded in controlling the appreciation of the Swiss franc against the dollar.
At the close of trading in Europe, the dollar's value was:(TABLE) (COLUMN)Close(COLUMN)Close (COLUMN)Monday(COLUMN)Friday Swiss francs(COLUMN)1.8775(COLUMN)1.8433 German marks(COLUMN)2.0275(COLUMN)2.0202 French francs(COLUMN)4.7712(COLUMN)4.7058 Japanese yen(COLUMN)235,20(COLUMN)237.05 British pound(COLUMN)$1.9373(COLUMN)$1.9405(END TABLE)
Market sources said speculators, apparently feeling that the yen still is undervalued against the dollar, has switched from the Swiss franc and West German mark into yen.
But a New York trader said there is still a feeling that the dollar "has gone just about as low as it can.
"It's entirely possible that, within the next week, you will see measures by the United States, West Germany, Switzerland and Japan that will restrict the buying of marks, Swiss francs and yen.
"There is definitely pressure not to be short on the dollar," he said. The market in Europe also was affected by polls predicting Socialist-Communist victories in the French elections. "This will bring a rush of currency from France to Switzerland and the ripple effect will hit the dollar," a foreign exchange analyst said.
Meanwhile a U.S. trade official said here that the decline in the value of the dollar on world money markets is "casting a cloud" over the world trade negotiations in Geneva.
Alonzo L. McDonald said the problems of the dollar are not having a direct impact on the negotiations themselves, but do have "an unsettling influence."
The steep decline in the dollar's value since the beginning of last year has begun to affect the prices that traders charge for their goods and could have a disrupting influence on trade between nations.
McDonald, however, said negotiators still hope they can complete negotiations on a world trade agreement by late this year and that it can be ready for consideration by national parliaments, including the U.S. Congress, by the end of the year.
In other developments touching on the dollar, a Saudi businessman said the fall of the currency would not prompt Saudi Arabia to take any action which might damage the United States. His remark helped the U.S. currency, dealers said.
The businessman, Adnan Khasboggi, chairman of the Triad group of companies, was speaking to Reuters during a trip to Seoul.
A senior Saudi oil official said in an interview published in Riyadh yesterday that world oil exporters may increase their dollar prices for oil, but would not abandon the dollar as the currency in which oil payments are made.
Oil Ministry Undersecretary Abdel-Aziz al-Turki told the newspaper Al-Riyadh that members of the Organization of Petroleum Exporting Countries are considering the possibility of calling an extraordinary conference to discuss the effect on revenues of the downward slide of the dollar.
"If the causes of the decline appear to indicate a continuing fall in dollar values, then OPEC will no doubt take appropriate action to protect the interests of member-states as it has done in the past," he added.
But two Arab oil ministers called for the replacement of the dollar as the currency used to peg oil prices.
The separate statements came from Qatar's oil and finance minister, Sheikh Abdul Aziz Bin Khalifa, and the oil minister of the United Arab Emirates, Mana Saeed Oteiba.