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Dollar gains ground

against mark, yen

NEW YORK: The dollar gained ground against the mark and yen on Wednesday as currency dealers trod cautiously in fear the central banks would repeat their Tuesday intervention that boosted the dollar.

Caution ruled the currency market in the wake of Tuesday's intervention, as players did not want to bet against the collective might of the world's three major central banks.

On Tuesday, the United States, Japan, and Germany rocked the market with a concerted purchases of the dollar, propelling the greenback to its highest levels against the yen and German mark in around six months.

"People were afraid to go short ahead of possible intervention," said David Ogg, foreign exchange manager at Midland Bank. "Being short is dangerous."

At the close, the dollar stood at 97.80/90 yen, up from 97.66/71 yen at the open. It also edged up to 1.4795/00 marks, from the open's 1.4759/64 marks.

Currency trade slowed substantially Wednesday as players reflected on the intervention, which was remarkable because it took place in the European market, emphasizing the German participation in seeking a higher dollar.

"People are regrouping, adjusting their positions," said one dealer at a major U.S. investment bank. "It's still a sleepy August market."

The dollar stood at the verge of regaining its levels at the start of the year, before it began a precipitious fall agians the yen and German mark.

"As long as those three banks are commited to keeping the dollar up, it should stay pretty well supported," said Ron Leven, global market strategist at JP Morgan & Co.

Dealers said the dollar would now face 1.50 marks and 100 yen as a target.

In other trade, the dollar stood at 1.2310/20 Swiss francs, down from 1.2267/74 francs at the open, and at Canadian$1.3585/90, down from C$1.3591/96.

Sterling closes at $1.5420/30, down from $1.5515/25 at the open, while the Australian dollar stood at $0.7324/29, from $0.7313/18.

At midday, the Morgan Guaranty trade-weighted index stood at 94.5, up from 94.2 from 92.6 percent on Monday.-Reuter