NEW YORK, AUG. 18 -- The dollar plunged against all major currencies in New York today, after many Japanese investors liquidated their holdings in a late response to Friday's report of a $15.7 billion June U.S. trade deficit.
Silver and gold rose, profiting from the dollar's decline.
The dollar in New York slumped to 146.20 yen, down from 149.60 Monday. Overnight in Tokyo, it dropped to 148.55 yen from Monday's close of 150.20 yen.
Bank of Montreal trader Thomas Benfer said that throughout the day the bulk of dollar transactions were liquidations against the yen. He said the action was dominated by disappointed Japanese investors who bought 30-year U.S. bonds on Thursday, before the trade news emerged.
Benfer said the trade deficit, and its implications for the dollar's future, seemed to have induced many Japanese bond buyers to resell their investments this week.
In New York, the dollar ended at 1.8440 marks, down from its Monday close of 1.8732 German marks. Earlier in Frankfurt, it fell to 1.8550 marks from 1.8786 Monday.
Karen Kluge, a trader with Credit Suisse, said many investors restrained themselves from mark transactions as morning trading began at around 1.8500. However, she said that in the late morning the dollar drifted to around 1.8300, also in a belated response to the trade deficit. At that point a sort of panic set in and many investors sold dollars.
Kluge and other traders said they had not expected the dollar to dip beneath the psychologically critical level of 1.8500. She added that today's lows established the 1.8350-to-1.8390 range as the currency's new trading floor