Following news of an unexpectedly large U.S. trade deficit for October, the dollar was pounded on foreign exchange markets yesterday, plunging to record lows despite coordinated central bank intervention -- including purchases of dollars by the Federal Reserve -- intended to slow the decline.

Exchange market trading was hectic, with the dollar sinking below the psychological barrier of 130 yen to 129.07 yen, and to 1.6329 West German marks in New York. The drop of the dollar in yen terms -- 2.36 percent in a single day -- brought it to the lowest point since modern exchange rates were established in the late 1940s.

In trading in Tokyo early Friday, the dollar opened at a record low of 128.75 yen, and at one point fell as low at 128.10.

Exchange market participants yesterday said they still believe that the policy being followed by Treasury Secretary James A. Baker III is to let the dollar weaken -- thus pushing up the price of imports into the United States -- in hopes that the competitive advantage for U.S. goods eventually will cause the trade deficit to shrink.

"With the yen at 129, the next stop would appear to be 120 to the dollar," said New York investment banker Geoffrey Bell, who criticized Baker's strategy as too risky. "If the dollar continues to go down, American interest rates will go up, or the stock market is going to crash again. Something will have to be done to reduce the high level of American consumption. I can't believe that foreigners are going to continue to finance the U.S. deficits, unless Washington does something to stop the dollar slide."

Officials acknowledged that there had been strong central bank intervention, led by the Fed in New York, the Bundesbank in Frankfurt and the Bank of England in London, when the dollar dropped below 1.64 West German marks from 1.66 marks the day before.

There was no indication that yesterday's dollar slide has accelerated the timetable for another meeting of the Group of Seven finance ministers. A new session of those officials from the United States, Japan, West Germany, France, England, Italy and Canada has been expected to follow completion of the U.S. budget reduction package. But as of late yesterday, an authoritative source said, a new G-7 meeting still had not been scheduled.

Several market analysts and investment bankers said yesterday that the dollar will continue to slide until the United States -- as urged by British Chancellor of the Exchequer Nigel Lawson -- is willing to raise interest rates to stop the dollar's slide. Until then, these observers say, a meeting of the G-7 would be useless and even counterproductive.

Henry Owen of the Consultants International Group said there is a growing feeling in Europe that the United States must take specific actions to stabilize the dollar. Owen, a former Carter administration official, said many Europeans are convinced that a G-7 meeting without a boost in U.S. interest rates would be a failure.

"Nothing is going to happen {to stabilize the dollar} until Baker says flat out that he doesn't want it to fall any more," said one Wall Street expert.

Baker, preoccupied yesterday with the negotiations on Capitol Hill to get legislation passed giving form to the deficit reduction package, had no comment on the dollar, although his spokesman put out a brief statement restating the administration view that over the past year, the trade picture had shown improvement in volume terms -- even if the decline in the dollar hides that improvement by boosting the value of imports.

Departing from their usual practice, officials did not try to hide the fact that there had been intervention yesterday by the Fed, although there was no formal confirmation of that from either the Fed or the Treasury Department. And the Italian central bank took the additional unusual step of announcing that its efforts to prop up the dollar had taken place in concert with the Fed in New York.

However, it quickly became apparent that intervention, no matter how well coordinated, would at best slow the dollar decline, but not halt or reverse it.