WASHINGTON, March 3 -- Treasury Secretary Robert Rubin said Friday the Federal Reserve Board served 'the national interest' in intervening in currency markets to prop up the dollar. 'A strong dollar is in our national interest. That is why we have acted in the markets in concert with others,' Rubin said in a statement. 'The administration is continuing its work on strengthening economic fundamentals, including bringing down the budget deficit further.' At a news conference, President Clinton said, 'The Treasury is taking appropriate action,' when asked about the Fed's intervention. Currency traders reported earlier that the Federal Reserve Bank of New York coordinated with European central banks to buy dollars in an attempt to lift the ailing currency. The central banks of Germany, Sweden, France, Switzerland, Denmark and Belgium joined the Fed during the North American trading session to prop up the dollar, traders said. Traders reported the Fed intervened in the currency markets at least three times during the North American trading session at 94.30 Japanese yen as the currency charted new historic lows, falling to 94.15 yen. Prime Minister Tomiichi Murayama confirmed Japan was coordinating intervention with Europe and the United States to boost the dollar. The Fed also was reported buying dollars for German marks, the first time at 1.4470 German marks, the second time at 1.4475 marks, just around 10 a.m. And a third time, it was buying at 1.4310 marks just after 11 a.m. EST. Despite the concerted intervention the dollar continued its meltdown against the Japanese yen, plunging on global markets through the 95-yen barrier for the first time since the end of World War II.
The ailing dollar did manage to regain some composure against the German mark, but only after being resuscitated earlier by at least 15 European central banks. However, analysts said the dollar was not recovering despite intervention. The central bank was managing the dollar decline to maintain an orderly market as traders believe the Fed is approaching the end of its tightening cycle. Boosting interest rates strengthens the dollar. Analysts cited the use of most of the U.S. Exchange Stabilization Fund for the Mexican aid package for the dollar's lack of recovery. The dollar has lost 4 percent of its value against the Japanese yen so far this year and 6 percent against the German mark. In 1994, it lost more than 10 percent of its value against the Japanese currency.
