The American dollar continued to show its ability to resist selling pressure yesterday, shrugging off another round of intervention by European central banks to close higher in somewhat nervous markets.
At the end of a hectic week's trading, the dollar had recovered some, but not all, of a sharp one-day loss on Wednesday, and was still close to its peak levels compared with the rest of the world's currencies.
Traders said that the dollar's resilience in the face of persistent European intervention was little short of remarkable. There were persistent, but unconfirmable, reports of participation by the Federal Reserve system on a limited basis.
"The feeling seems to be that the market has weathered the central bank assault," a dealer told United Press International. "If their intention was to stabilize the dollar they have done so, but if it was to depress the value they failed because there's still too much natural demand."
In a session with Washington Post editors, Swedish banker Curt G. Olsson suggested the strength of the American economy relative to Europe would keep the dollar strong. Olsson, chairman of Skaninaviska Enskilda Banken, said that "for capital investment, there is little alternative to the United States. "
As was the case earlier in the week, the major effort to depress the dollar exchange rate yesterday came from the West German Bundesbank, which reportedly sold about $1 billion out of the total of $1.5 billion in U.S. currency that was thrown on the market.
At the end of the day, the dollar was quoted at 3.36 marks, up from 3.3450 Thursday. It rose in Paris to 10.26 French francs, against 10.18 the day before. In London, the pound dropped to $1.0715 from $1.0842 Thursday, but remained above the all-time low of $1.0395 reached during turbulent trading on Tuesday.
In New York trading, the dollar fell to 3.3450 deutsche marks from 3.3675 late yesterday; 1.0775 pounds from 1.0175; 2.8625 Swiss francs from 2.8765; 259.90 yen from 260.33 and 10.2350 French francs from 10.2700. But the U.S. dollar rose to 1.39 Canadian dollars from 1.3870 yesterday.
In Europe, gold slipped fractionally to $287.60 an ounce, and was unchanged in Zurich at $287.50.
All told, the three-day intervention exercise in Europe's fight to strengthen its own currencies was estimated by dealers to have cost the central banks about $4 billion, of which the German Bundesbank put up about $2.5 billion.
Only token amounts were reported to have been sold during the week by the New York Federal Reserve Bank, on directive from the Treasury, although some dealers said they thought the Fed had been somewhat more aggressive yesterday than earlier in the week.
There was positive news on the American economy that helped offset the European intervention, a larger-than-anticipated increase (1.7 percent) in the leading indicators that was taken as a forerunner of strong economic growth. Some analysts expect that the Federal Reserve Board, which already has announced that it had stopped easing policy, might be forced to tighten, pushing up interest rates and ultimately the dollar.