NO INTERVENTION, DOLLAR FIXED AT 1.8218 MARKS
The Bundesbank did not intervene as
the dollar was fixed lower at 1.8218 marks after 1.8243
yesterday, dealers said.
    Dealers said dollar trading was very quiet over the
European morning, with operators made wary by today's meeting
of the Group of Five finance ministers and central bank chiefs
ahead of the full IMF/World Bank session in Washington.
    It was undermined by remarks from U.S. Council of Economic
Advisers Chairman Beryl Sprinkel who told Iowa bankers the U.S.
Had no objective regarding the value of the dollar.
    Sprinkel also called the reference to stabilizing exchange
rates at about current levels, made at the Paris meeting on
February 22, a "vague statement," casting doubt on operators'
assumptions that a secret target level had been set.
    Sprinkel added that if West Germany and Japan made progress
to stimulate their economies as the Paris agreement envisaged,
"there would not be the necessity of significant declines in the
dollar."
    One dealer for a U.S.-based bank noted the dollar tended
easier after the remarks. "They were obviously regarded as being
negative. And if the market starts regarding anything that
comes out negatively then it means that the underlying
sentiment is negative," he said.
    Some early selling pressure softened the dollar's
undertone.
    Most operators overlooked intervention by the Bank of Japan
to support the dollar against selling in favour of the yen by
institutional investors and overseas operators, dealers said.
    After the strong focus on the dollar/yen rate in recent
weeks up to the end of the Japanese financial year on March 31,
interest and activity was likely to switch, dealers said.
    "We can start to look at a point in time where the interest
shifts away from dollar/yen and more into dollar/mark and the
other European currencies," the U.S. Bank dealer said.
    Despite the softer undertone, traders would remain wary of
taking significant new positions during the Washington
meetings, dealers said. Aside from the G-5 session today,
Bundesbank President Karl Otto Poehl is due to meet the German
Affairs group on international monetary issues later.
    The mark gained some strength from news the Bundesbank set
a new securities repurchase tender to add money market
liquidity at a fixed 3.80 pct, unchanged from those over the
last several weeks. Some expectation had been growing that it
might cut the rate or move to a minimum interest rate tender,
signalling a desire for a slight easing in credit policy.
    Bundesbank central bank council member Lothar Mueller said
the Bundesbank had not given up its focus on money supply. A
monetary policy which took into account exchange rates and
capital flows could not be confused with an exchange-rate
oriented policy, he said, contradicting some growing sentiment.
    Sterling eased a touch to 2.950 marks at the fixing from
2.957. The yen's unabated strength, despite the intervention,
brought it up to 1.2555 marks per 100 from yesterday's 1.2480.
    The Swiss franc rose to a fix of 120.515 marks per 100 from
120.180. The French franc eased to 30.055 marks per 100 after
30.060, Belgian franc was little changed at 4.829 marks per
100.
 REUTER
