Dollar rallies in wake of support from banks

May 06, 1994|By Bloomberg Business News

NEW YORK -- The dollar rallied against major currencies yesterday amid speculation that the world's major central banks might team up to support it for a second day.

The Federal Reserve and more than a dozen other central banks bought dollars Wednesday to halt its recent slump.

There wasn't a sign of central bank buying yesterday, traders said, though many expect the banks to jump in if the dollar resumes its slide.

"People are nervous about the central banks coming back," said Earl Johnson, foreign-exchange adviser at Harris Trust & Savings Bank in Chicago. "Their attack was very effective."

The dollar was last quoted at 1.6665 German marks, up from 1.6531 marks late Wednesday.

It rose as high as 1.6712 marks in London trading. The dollar rose to 102.90 yen from 101.86 yen.

"Central bankers accomplished what they set out to do," said Kevin Lawrie, foreign-exchange manager at Mellon Bank in Pittsburgh. "The dollar is higher, at least for now."

The Fed and its allies propped up the dollar as it tumbled toward a post-World War II low against the yen and a six-month low against the mark.

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