The dollar bounced back yesterday afternoon, but not before it again hit new postwar lows against the West German mark and Japanese yen in extremely nervous foreign exchange markets.
Gold, meanwhile set a record price of $233.70 at the London afternoon fixing, up nearly $3 for the day.
The dollar's rebound began after the Commerce Department announced it would released the September trade figures early. There were reports the early release had come at the urgin of Treasury. Secretary W. Michael Blumenthal to stem the dollar's slide.
Moreover, announcement of the figures seemed to be coordinated with Federal Reserve intervention in the New York currency markets to bolster the dollar.
Some participants labeled the intervention significant, but one banker noted that "it is the easiest thing in the world to push up a currency in a very, very thin market like we've had this afternoon. It will be more important what the fed does tomorrow."
The September trade deficit of $1.69 billion, while larger than August's, was at the low end of the expectations in the currency markets and therefore helped the dollar.
Some currency traders said yesterday's battering of the dollar was one of the worst yet seen. "There is nothing on the horizon to keep the dollar from falling further," one trader said.
Other participants disagreed and, citing reduced central bank intervention from Wednesday's large levels, said the dollar may have stablized for the time being and could be ripe for a technical turnaround.
The dollar closed the day in New York worth just under 1.78 marks, after hitting a record low earlier of 1.7590 marks.
Against the Japanese currency, the dollar was worth as little as 178.20 yen before recovering to close at just over 179 yen in New York.
Meanwhile, dollar purchases by foreign central banks to keep their own currencies from appreciating were reported to be creating growing problems for West Germany, Switzerland and Japan in managing their own domestic money supplies.
The West German Bundesbank disclosed yesterday that its net monetary reserves rose by 2.5 billion marks in the week ended Oct. 20 to 96.9 billion marks. This brought the total increase for the last month to about 9 billion marks, or about $5.1 billion. So far this week, the Bank of Japan is estimated to have absorbed $1 billion, and reserve figures for the Swiss National Bank show that it absorbed $1.8 billion in the first three weeks of October.