DOLLAR STEADY NEAR LOWS AT LONDON MIDSESSION
The dollar was steady near lower opening
levels in extremely quiet trading and dealers did not expect
the U.S. Currency to move significantly before the series of
high-level monetary meetings starting today in Washington.
    Sterling trading was equally quiet.
    Bullishness on the back of two new opinion polls suggesting
Britain's ruling Conservative party had increased its lead over
the opposition was checked by fears of fresh sterling-selling
intervention by the Bank of England, dealers said.
    The dollar fetched 1.8215/25 marks at midsession against
1.8195/8205 at the opening and 1.8245/55 in Europe last night.
    The dollar was quoted at 145.10/20 yen, virtually unchanged
from its opening 145.05/15 but sharply below yesterday's
European closing 146.00/10.
    It briefly dipped below 145 yen, to a quoted low of 144.85,
but recovered later to trade quietly around opening levels,
dealers said.
    Trade-weighted, sterling stood at 72.3 pct of its 1975
value, unchanged form the opening but one basis point below
yesterday's close. The pound fetched 2.9480/9520 marks and
1.6190/6200 dlrs at midsession after its opening 2.9540/75 and
1.6213/23, and yesterday's closing 2.9490/9530 and 1.6163/73.
    Dealers said dollar business had virtually halted in Europe
after a large selloff against the yen in the Far East, which
sustained Bank of Japan intervention failed to stem earlier
today.
    They said that in the absence of other factors,
participants awaited the outcome of the informal talks of Group
of Five finance ministers and central bankers in Washington
today, and Group of Seven monetary talks tomorrow.
    Most dealers expected the meetings to produce little more
than a vaguely worded statement to reaffirm shared objectives
of stable currency markets and economic policy coordination.
    The Group of Five and Canada agreed in Paris on February 22
to call a halt to the dollar's sharp decline, and several
participant central banks have since intervened to keep
currencies within narrow ranges against each other.
    But a flare-up of the long-standing trade frictions between
the U.S. And Japan last month encouraged markets to test the
agreement, pushing the dollar sharply lower against the yen.
    Dealers said that short of a convincing undertaking by
Japan at the Washington talks to step up efforts to reduce
trade surpluses and stimulate domestic demand, the dollar would
resume its fall, especially against the yen.
    Without agreement on the trade issue, the dollar appears
set to test support levels at 143 yen in the very short term,
with 140 yen within reach over the next few weeks, dealers
said.
    Some dealers said Japan appears ready to compromise with
the U.S. On economic policy issues.
    Expectations were rising of a further half-point cut in the
Japanese discount rate and Japan's ruling Liberal Democratic
Party today announced an outline agreement on economic
reflation which includes a 5,000 billion yen additional budget
for 1987, the dealers said.
    Some dealers said the market could get some impetus from
U.S. Federal Reserve chairman Paul Volcker when he testifies on
Third World debt problems before the Senate banking committee
later today.
    Dealers said sterling remained firm amid growing confidence
the ruling Conservative party is assured of victory in an
election which they said would likely be called for June.
    One poll out today showed the Conservatives leading with 43
pct support against Labour's 30 pct and the Liberal-Social
Democratic Alliance at 26 pct. Another poll forecast a
Conserative majority of 92 seats in a new parliament.
    But wariness of Bank of England sterling-selling
intervention made participants cautious about pushing the pound
much higher, dealers said.
    Some dealers said the Bank of England was believed to have
intervened on a small scale yesterday but others said they had
not detected such action. No polled dealer said he had sighted
Bank intervention today.
    The dollar was quoted at 1.5110/20 Swiss francs at
midsession against 1.5130/40 at the opening and a 1.5180/90
European close. It fetched 6.0575/0625 French francs against
6.0525/75 at the opening and 6.0660/0710 at close.
 REUTER
