One of the best-kept financial market secrets is the intervention by a central bank to affect the value of its currency in exchange markets.

By buying or selling dollars, the Federal Reserve System can push up or depress the value of the American currency against, say, the West German mark or Japanese yen.

Of course, when financial officials want the markets to know they have been intervening, they discreetly or openly pass the word around. Thus, when the dollar plunged last Thursday after the discouraging October trade report, central banks in Europe publicly announced that they had intervened.

And when the Italian central bank said that its support operation was a joint one with the Federal Reserve, it was pointless for the Fed to deny that it, too, had intervened to support the dollar.

Ordinarily, however, the New York Federal Reserve Bank, which engages in these operations on behalf of the U.S. government, keeps the markets guessing on its activities. And a constant reply to inquiries at the Treasury Department is: "We don't comment on intervention."

But every three months -- with a one-month lag -- the New York Fed reports and comments on Treasury and Fed foreign exchange operations. And its report issued Dec. 4 for the three months ended Oct. 31, which includes the period of the stock market collapse, challenges a widespread belief in financial markets that the United States willingly let the dollar slide at the end of October without an effort to stop it.

According to the New York Fed report, when "selling pressure on the dollar became intense on Oct. 27" the Fed intervened by $395 million against the mark "in order to resist a further decline in the dollar/mark rate" and by $65 million against the yen.

"While these operations for a time stabilized the rate, the dollar again moved sharply lower following commentary that the U.S. authorities were prepared to allow the dollar to decline considerably further," said the report, prepared by executive vice president Sam Y. Cross.

"Although the U.S. Treasury denied that the remarks reflected U.S. government policies, strong selling pressure persisted and the {Fed} desk continued to intervene, operating in yen as well as in marks {in cooperation with other central banks}."

The "commentary" cited by the Fed report, it was learned, was a speech on Oct. 28 by European Community President Jacques Delors asserting that the U.S. government wanted the dollar to decline and was prepared to let it fall as low as 1.60 German marks.

At that time, the dollar was hovering around 1.72 marks, down from 1.80 in mid-October and close to an all-time low set eight years earlier.

The intervention policy was moderate by European standards but certainly not inconsequential, exchange market experts said. The narrative in the Cross report seems to imply that the effectiveness of the intervention policy was diluted by the Delors episode. But New York Fed spokesmen cautioned that intervention alone cannot be expected to counter underlying economic trends.

Nonetheless, against the background provided by the Fed's report, observers raised doubts about recent stories to the effect that there has been a subtle change in administration policy, described as a return to modest intervention to support the dollar. A report on November's foreign exchange operations won't be available until next March.

But in the context of the New York Fed's report, it would appear that there has been no change of policy since late October, when the Fed joined other central banks in an effort to resist market forces depressing the dollar.

From August to October, the report said, the United States intervened by a total of $899.5 million equivalent of German marks and Japanese yen in an effort to depress those currencies and consequently bring the dollar up.

And in early August, when the stock market was riding high and the dollar was strong, the report showed that the United States bought $400.8 million worth of yen and marks to restrain the dollar's rise.

The Cross report also contained a candid evaluation of other events contributing to market instability before the crash, including an assessment of the role of Treasury Secretary James A. Baker III. It said that comments by Baker caused "new uncertainties" in exchange markets just prior to the October crash.

Baker's White House briefing statement on Oct. 15 -- following an unfavorable report on the August trade deficit -- "to the effect that surplus countries should not raise interest rates in the expectation that U.S. interest rates would surely follow, and that the Louvre framework could accommodate further currency adjustments, imparted new uncertainties to the markets," the Fed report said.

"A press article asserting that Secretary Baker wanted to see the dollar decline was widely assumed to be true, despite his express denial of its accuracy."

The dollar then moved sharply lower during the weekend of Oct. 17, just ahead of Black Monday. After a temporary respite following Baker's meeting with German officials in Frankfurt that day, the dollar again came under "strong downward pressure."

When this latest burst of selling gained force on Oct. 27, the Fed resumed intervention to support the dollar -- the first time it had done so since early in September, when the dollar was moving down to levels not tested since weakness in the late spring.

The September decline appeared to have been halted by the Fed's half-point boost in the discount rate on Sept. 4 and from anticipation that the Group of Seven industrial nations would reaffirm the Louvre agreement at the meeting a few weeks later of the International Monetary Fund.

A certain calm then prevailed, without intervention, until the Oct. 14 announcement of another big trade deficit in August.