BUNDESBANK BUYS DOLLARS IN FRANKFURT - DEALERS
The Bundesbank bought large amounts
of dollars for yen in an apparent attempt to hold the dollar
above 149 yen, dealers said.
    The dollar intervention was in concert with some other
central banks, they said.
    Dealers said the Bank of Japan and Bank of England
supported the dollar against the yen earlier today and that
these two banks and the U.S. Federal Reserve were also active
yesterday.
    The Bundesbank declined to comment on the dealers' remarks.
    Dealers said the intervention underlined the determination
of central banks to keep currencies within recent ranges
following last month's agreement in Paris by six leading
countries to foster currency stability.
    One dealer said he had been repeatedly in contact with the
Bundesbank during the morning to see if it wanted to buy
dollars after the Japanese and U.K. Central bank moves.
    He said the Bundesbank told him it was observing the
situation to see if it should intervene in consultation with
other central banks.
    Since the Paris agreement on February 22 the dollar had
until yesterday traded in a 1.8150-1.8700 mark range, and above
150 yen, with traders reluctant to push the dollar down to test
central banks' resolve to defend currency stability.
    But the test came this week with the dollar falling below
1.81 marks and 150 yen. Dealers said a reviving trade dispute
between Washington and Tokyo and growing sentiment that the
dollar would have to fall further to narrow the obstinate U.S.
Trade deficit were behind the weakness.
    This week's intervention showed central banks were prepared
to cooperate to defend the Paris pact, dealers said.
    Dealers said it was significant the West German and British
central banks were supporting the dollar against the yen.
    That showed the pact involved multilateral cooperation by
central banks to foster currency stability, they said.
    But it was unclear how such cooperation was being arranged
and how frequent consultations between central banks were.
 REUTER
