The dollar rose against most foreign currencies for an eighth consecutive trading day Wednesday, despite some late profit-taking based on the chance that central banks might seek to curb the dollar advance.
Dealers reported that the Bank of Japan and the Dutch central bank intervened in the markets, but the West German Bundesbank and the Federal Reserve Board remained on the sidelines.
However, West German bankers acted to reduce an outpouring of marks to the United States resulting from the dollar`s surge.
After rising to a 13-year peak of 3.3075 marks in the New York market, the dollar fell back to an exchange rate of 3.2995 marks late in the day. That still left it above Tuesday`s closing rate of 3.2928 marks.
The British pound ended at $1.0906 in New York after falling to a record low of $1.0850 in London.
Dealers said pressure on the pound increased on rumors that the Norwegian state oil company was undercutting British oil prices.
The West German capital markets committee put a temporary halt on new Eurobond issues denominated in marks and canceled indefinitely a Euromark issue by the Inter-American Development Bank that was scheduled to enter the market Wednesday.
The committee, made up of a group of representatives from West German banks that control access to the mark-denominated Eurobond market, gave no reason for the halt, but dealers said the Euromark bond market had been straining under the weight of new issues for some time.
”I would guess the West Germans are trying to slow down the export of marks to the dollar market,” said Martin S. McAuley, vice president of international banking at Continental Illinois National Bank and Trust Co. of Chicago.
West Germany reported that its net monetary reserves fell by 1.2 billion marks in the week ended Feb. 7 to 63.1 billion marks. Net reserves also fell 1.2 billion marks a week earlier.
Banking sources said later that the Bundesbank had proposed permitting the branches of non-German banks to underwrite deutsche mark Eurobonds if their home countries gave German banks the same ability.
McAuley said many U.S. corporations had been obtaining financing in the Euromark market recently because it was cheaper to obtain marks than dollars. ”Borrowing in European currencies, if unhedged, has been extremely profitable in the past year,” he said, ”but the risk is increasing. If you borrow at 3.30 marks, and the rate goes up to 3.50, you`ll make a good profit. But if it drops to, say, 2.20 marks, you`ll be paying an awful lot for financing.”
