Dollar selling continued to dominate world financial centers yesterday, with the U.S. currency reaching some record lows.

The speed of the dollar's descent slowed considerably, however, from the rapid slide that began Thursday in response to signals from the Reagan administration that it is willing to see the currency sink lower.

Trading volumes yesterday were generally small.

"You often see a day of heavy selling and the next day you see a leveling off of the market," said David Montgomery, assistant manager of the Washington office of Deak International Inc., a major currency trading company.

Traders suggested that the buying that slowed the fall yesterday was motivated not by confidence in the dollar but by speculators acquiring dollars to cover "short" positions they had taken on Thursday.

In short selling, speculators sell more dollars than they have on hand, in the expectation that the currency's price will fall and they will be able to buy dollars at a lower price to make good on the original sale.

Thursday's plunge continued despite an announcement by West Germany that it would lower two short-term interest rates, while leaving its discount rate unchanged. Although hailed by U.S. officials as a victory for its policies, some financial analysts termed the move "too little, too late."

"It was only a minor easing," said Allen Sinai, chief economist for Shearson Lehman Bros., a New York investment house. "The German cut in interest rates was as much a desire to stabilize the deutsche mark against the French franc as it was to work with the United States."

In Tokyo, the first place in the world where trading begins each day, the dollar fell against the yen yesterday to its fourth record low in six trading days. Intervention in the market by Japan's central bank failed to stop the decline.

Japanese Finance Minister Kiichi Miyazawa reportedly told a press conference in Tokyo that the dollar may be bottoming out but that in any case Japan will continue to intervene in an attempt to keep the yen from rising.

Japan is desperate to support the dollar because declines tend to make Japanese products more expensive overseas and bite into the country's export-oriented economy.

The dollar has already slipped to almost half the value it had against the Japanese currency in early 1985, when it was trading at 260 yen.

The West German central bank intervened to defend the dollar, but it nonetheless slipped to a record low in Frankfurt for the third day in a row.

In London, the dollar fell against the British pound for the 14th straight trading day, hitting a five-year low. Some analysts suggested that the European market was buoyed a bit by news from Washington that the Republicans might be giving ground on budget cuts.

In New York, the dollar closed at 135.05 yen, down from 135.10 Thursday. The West German mark was at 1.6705, down from 1.6767.

Gold price, meanwhile, rose. a common phenomenon when the dollar falls. The Associated Press reported bids of $461 per troy ounce, up $3 from Thursday's late bid.

Washington Post staff writer Hobart Rowen contributed to this report.