DOLLAR/YEN INTERVENTION RESPONDS TO PRESSURE
The Bank of France intervened to buy
small amounts of dollars and sell yen in Paris today to
stabilise the exchange rates agreed at last month's meeting of
Finance Ministers of the Group of Five and Canada, foreign
exchange dealers said.
    But they said recent central bank intervention in the
foreign exchange markets appeared to be a limited reaction to
temporary pressures rather than a major defence operation.
    A Bank of France spokesman declined all comment but sources
close to the central bank said it had also intervened
yesterday.
    Dealers said the earlier intervention was in concert with
the Bundesbank and Bank of Japan.
    The sources said the French central bank could have been in
the market again today in two-way operations, not necessarily
on its own account, but to counter short-term pressures arising
from the end of the Japanese financial year on March 31.
    One major French bank said it bought between five and 15
mln dlrs for the central bank and sold yen at 149.28 to the
dollar.
    Another bank said it had been asked by the Bank of France
to say it was in the market, a departure from the central
bank's usual insistence on confidentiality.
    But other banks said they had seen no sign of intervention,
which they said appeared to be on a very limited scale.
    "Even if 10 banks were buying five to 15 mln dlrs, you would
still be talking of a small overall amount," said one dealer.
    Recent intervention by the Bank of Japan appeared mainly to
have been required to meet year-end window dressing demand for
yen. "This is a specific short term phenomenon rather than a
wider trend," the dealer said.
    Operators have been extremely cautious about testing the
dollar's trading ranges against the West German mark and
Japanese yen.
    These ranges were set in February's stabilisation agreement
reached here by U.S. Treasury Secretary James Baker and the
Finance Ministers of Japan, Germany, France, Britain and
Canada.
    But speculative pressures started to build again this week
after Baker was quoted on British television at the weekend as
repeating earlier statements that Washington had no target for
the dollar.
    Baker yesterday moved to defuse speculation he was talking
the dollar down, telling a Cable News Network interviewer and a
Senate committee he stood by the Paris agreement. Foreign
exchange markets had been misreading his comments, he said.
 REUTER
