Plagued by continuing uncertainties abroad over President Carter's energy and economic policies, the dollar continued its two-month slide yesterday while gold hit a record $307.375 an ounce.
As a result of the slide, the value of the dollar is now only 2.7 percent above its low of last Oct. 30 - a level that triggered the dramatic $30 billion international rescue operation Nov. 1.
Foreign exchange dealers said yesterday's moderate decline in the dollar would have been much sharper had it not been for intervention by the Federal Reserve and the central banks of West Germany and Switzerland.
Since May 21, the value of the dollar has fallen 3.6 percent against 15 other major currencies. On most days, the declines, like yesterday's, haven't been large, but they have been steady. Now the market psychology has shifted, with most currency dealers expecting the dollar to go down, virtually a self-fulfilling expectation.
Banks and corporations, struck by the same fear, are holding dollars no longer than absolutely necessary. The result is that dollar holdings are reduced, and the added sales of the currency help push it down still more.
Federal Reserve Chairman G. William Miller, who has been nominated to be secretary of the Treasury, said Monday that because the dollar's decline has been "orderly," no new rescue plans are needed. Last November, the administration , in conjunction with several European governments and the Japanese, announced a $30 billion rescue package of measures intended to half a precipitous fall in the dollar's value.
Last fall's slump also was tied to Carter administration economic policies. The administration had been reluctant to allow interest rates to rise and possibly hurt the expanding economy. (A rise in rates can attract more foreign investments in the U.S., which increases the demand for dollars and props up the dollar's value.)
Nor had administration efforts to fight inflation convinced foreign exchange markets. When President Carter unveiled his new wage and price standard in late October, with no accompanying move toward higher interest rates, the dollar fell out of bed.
The dollar rescue package worked, primarily because shorterm interest rates went up nearly a full percentage point as part of it. By the first of December, it had risen 6.6 percent.
Then inflation began to worsen in the U.S., and the economy seemed to be growing too fast for comfort. The markets turned sour again, so that by Jan. 2, more than half of that rebound had been lost.
The central banks began ever larger interventions and the tide was turned. The U.S. did its part, using about $6.5 billion worth of borrowed foreign currencies to buy dollars.
Over the course of the late winter and early spring, the dollar again strengthened. In fact, it was strong enough for the U.S. to sell enough dollars to repay the entire $6.5 billion. Foreign central banks, too, were selling dollars.
Because oil prices are set internationally in dollars, a rising dollar made oil, which was going up anyway, that much more costly in other countries.
The oil shortage caused by the Iranian revolution helped the dollar for a while, as the markets digested the fact that the U.S. produces much more of the energy it consumes than do many other nations, including West Germany and Japan.
Then in early June, the uncertainties began to crop up again.
The U.S. reborrowed some of the currencies it had repaid and stepped up its intervention. And interest rates here began to drift upward again. But the value of those developments were lost when Carter cancelled his planned energy speech.
Yesterday it closed at 1.8095 West German marks, down from 1.8115 on Monday, and at 1.6317 Swiss francs, down from 1.6323. It fell more sharply against the yen, ending at 214.27 compared with 215.45 the day before.
The British pound reached a four-year high of $2.3255, up from $2.3025. The pound has been rising against all currencies, however, including the mark and the Swiss franc. CAPTION: Chart, Value of the U.S. Dollar, By Alice Kresse - The Washington Post