The dollar remained on the defensive insubdued dealings with few traders willing to take any major
risks ahead of this week's international monetary meetings in
Washington, dealers said.
    "Everybody is waiting for developments from the talks. In
the meantime, it's just jobbing positions back and forth," said
a dealer at one U.S. bank.
    The Group of Five, comprising the U.S., Japan, West
Germany, France and the U.K., are scheduled to convene today.
    The dollar hovered at 145.25/30 yen, down from 145.85/90
last night, and eased to 1.8255/60 marks from 1.8260/70.
    The stage for the dollar's decline was set overnight in the
Far East where the U.S. currency retreated despite steady
intervention on its behalf by the Bank of Japan.
    Dealers in Japan cited speculation that the G-5/G-7 talks
are unlikely to produce any significant or lasting measures to
stabilize currencies as one reason for the sell-off.
    No central bank intervention was detected in the U.S. where
the dollar kept well within recent trading parameters.
    Despite the view that trade and economic imbalances dictate
a downward course for the dollar, few U.S. dealers wished to
sell it aggressively before this week's meetings.
    Statements by Federal Reserve Board chairman Paul Volcker
during testimony before the Senate Banking Committe failed to
rouse the market from its inertia.
    Volcker reiterated that a further, sizeable dollar decline
may be counter-productive. He also said that currency changes
that have occurred so far should be large enough -- in a
context of a growing world economy and fiscal restraint in the
U.S. -- to support expectations for a narrower U.S. trade gap.
    "There was nothing new or remarkable there," said a dealer
at one European bank. The dollar's brief rise to 1.8270 marks
was already underway when Volcker spoke, he added.
    With the dollar becalmed, dealers looked to cross-rates,
especially sterling, yen and Swiss franc, for interest.
    Sterling continued to benefit from U.K. public opinion
polls indicating a lead for the ruling Conservative party in
any general election and following signals of an improved
economy.
    The pound hovered at 1.6175/85 dlrs, unchanged from Monday,
and at 2.955 marks, off slightly from about 2.955 last night.
    The dollar eased to 1.5120/30 Swiss francs from 1.5180/90,
and to 1.3048/53 Canadian dollars from 1.3080/85 yesterday.
 Reuter
