DOLLAR ENDS WITH MODEST LOSSES IN NEW YORK
The dollar ended with modest net losses
against most major currencies as the market conducted a final
round of position-squaring ahead of tomorrow's crucial Group of
Five and Group of Seven meetings, dealers said.
    "The dollar was trendless today. People are waiting to see
if anything new comes from the meetings tomorrow and will then
take it from there," said one dealer at a top European bank.
    As a result, generally supportive comments by Federal
Reserve Chairman Paul Volcker and Japanese Finance Minister
Kiichi Miyazawa went largely unheeded.
    The dollar closed at 145.60/70 yen, down from 145.85/90.
    However, the dollar's yen closing level was comfortably
above its overseas low of just under 145 yen. Against the mark,
the dollar finished at 1.8270/80 marks after falling to 1.8180
in Europe and ending at 1.8260/70 here yesterday.
    In Congressional testimony this morning, Fed Chairman Paul
Volcker harped on his long-held fears about the potentially
catastrophic fallout from a sharp dollar decline.
    He also said the dollar's fall, thus far, should be "large
enough, in a context of a growing world economy and fiscal
restraint in the U.S., to support widespread expectations of a
narrowing in the real trade deficit in the period ahead."
    The market impact of Volcker's comments was minimal. "It
was the same old story. Volcker was just fulfilling his role as
a defender of the currency," said one trader.
    The market was similarly dismissive of Japanese Finance
Minister Kiichi Miyazawa's upbeat appraisal of his hour-long
conversation with U.S. Treasury Secretary James Baker this
afternoon.
    Miyazawa said that they both agreed on the need for
currency stabilization and that he was satisfied with the role
the U.S. has played in coordinated international efforts to
prop up the dollar since the late February Paris agreement.
    "Miyazawa can talk until he's blue in the face. The only
person who will make a difference is Baker," said Alan Rose of
First Interstate Bank in Los Angeles.
    "The key question for the currency market is whether the
(Reagan) administration will have a change of view on the
dollar. If not, the dollar is going lower," he added.
    The dollar's recent tumble to a 40-year low of 144.70 yen
was linked to the market's perception that Washington was
unhappy with the rate of adjustment of world trade imbalances
and that a continued orderly dollar decline was the least
disruptive way of accelerating the process.
    While most analysts do not expect any marked change of
attitude in Washington, they were reluctant to open any fresh
positions until later in the week.
    "We are reserving judgement for the time being," said Doug
Madison of Commerzbank Ag.
    The tranquility of the dollar market spread to sterling
trading today. The pound ended unchanged against the dollar at
1.6175/85 and edged up to 2.957 marks from 2.955 yesterday.
    However, underyling sentiment remains positive after a U.K.
opinion poll gave the ruling Conservative party its highest
popularity rating since it was re-elected in 1983.
    "Sterling still seems to be on the firm side," said one
dealer.
    The Canadian currency also retained a generally stronger
tone, rising to 1.3055/60 to its U.S. counterpart from
1.3080/85 yesterday.
    According to figures provided by Morgan Guaranty Trust Co,
the dollar's trade-weighted value at midday was 5.7 pct below
average market rates in 1980-82, compared with 5.5 pct
yesterday.
 Reuter
