CURRENCY : Dollar’s Rally Gets Fresh Support

NEW YORK — The dollar jumped Friday as its summer rally gained fresh support from a report of a bigger-than-expected decline in the U.S. unemployment rate. Gold prices were mixed.

The dollar reached its highest point since last October against the British pound, West German mark and Swiss franc. It reached its highest point since last August against the French franc and Italian lira.

Intervention by the Bundesbank, West Germany’s central bank, failed to halt the dollar’s upward swing. Traders said the U.S. Federal Reserve also sold dollars, but it was not clear whether the Fed did so for itself or on behalf of the West Germans.

Traders said the drop in the June civilian jobless rate to 5.3%, its lowest point since 1974, increased prospects that the Federal Reserve would push up interest rates to keep the economy from overheating. That would make dollar securities more attractive to foreign investors.

In addition, a big rise in manufacturing employment was seen as an indication that exports remained strong, which could help shrink the trade deficit and support the dollar.

Forced to Retreat

But several analysts said the dollar was primed for a rise anyway because its slight weakness in recent days was taken as a buying opportunity.

“When people want to buy a currency, they find good excuses for it,” said Samuel Kahan, chief financial economist for Kleinwort Benson Government Securities Inc. in Chicago.

Once the dollar started upward, traders who had been betting on its decline were forced to retreat and buy dollars to close out short positions, said David Lapin, chief currency adviser for BankAmerica International in New York.

“It’s a snowballing effect, a game of follow the leader,” Lapin said.

In Tokyo, where trading ends before Europe’s business day begins, the dollar fell 0.33 yen to a closing 131.97 yen. Later, in London, it was quoted higher at 133.20 yen. Later in New York, the dollar rose to 133.29 yen from 132.73 late Thursday.

In London, the dollar rose against the British pound. It cost $1.7015 to buy one pound, cheaper than $1.7180 Thursday. The pound also fell against the dollar in New York, to $1.6996 from $1.7134 late Thursday.

Other late dollar rates in New York, compared to late Thursday’s rates, included: 1.8415 West German marks, up from 1.8221; 1.5325 Swiss francs, up from 1.5151; 1.2091 Canadian dollars, up from 1.2080; 6.1945 French francs, up from 6.1325, and 1,364.50 Italian lire, up from 1,349.75.

Other late dollar rates in Europe, compared to late Thursday’s rates, included: 1.8378 West German marks, up from 1.8161; 1.5295 Swiss francs, up from 1.5100; 6.1820 French francs, up from 6.1140; 2.0605 Dutch guilders, up from 2.0440; 1,355.00 Italian lire, up from 1,346.50, and 1.2095 Canadian dollars, up from 1.2050.

Gold Mixed

In Hong Kong, gold rose $1.09 an ounce to close at a bid $441.59 an ounce.

In Europe, gold prices rose briefly, but then fell back. Gold finished in London at a late bid price of $438.50 an ounce, down from Thursday’s late bid of $440.25. In Zurich, gold closed at a bid $439.50 an ounce, down from $441.00 an ounce late Thursday.

Republic National Bank of New York said gold was bid at $439 an ounce as of 4 p.m. EDT, up from $438.90 an ounce late Thursday. At the end of the trading day on the Commodity Exchange in New York, gold bullion for current delivery closed at $439.10 an ounce, unchanged from Thursday’s close.

Silver was quoted Friday in London at a late bid price of $7.01 an ounce, up from Thursday’s $6.98 an ounce. At New York’s Comex, silver bullion for current delivery closed at $7 an ounce, up from $6.935.

Tables, Page 8