U.S. INTERVENED TO AID DLR IN JANUARY, FED SAYS

  U.S. authorities intervened in the
  foreign exchange market to support the dollar on one occasion
  during the period between the start of November 1986 and the
  end of January, the Federal Reserve Bank of New York said in a
  report.
      The Fed's quarterly review of foreign exchange operations
  said that the U.S. bought 50 mln dlrs through the sale of yen
  on January 28. This operation was coordinated with the Japanese
  monetary authorities and was funded equally by the Fed and the
  U.S. Treasury.
      The Fed's intervention was on the morning after president
  Reagan's State of the Union message and was "in a manner
  consistent with the joint statement" made by U.S. Treasury
  secretary James Baker and Japanese finance minister Kiichi
  Miyazawa after their January 21 consultations.
      At that meeting, the two reaffirmed their willingness to
  cooperate on exchange rate issues.
      The Fed's report did not say at what level the intervention
  occurred. But on January 28, the dollar closed at 151.50/60 yen
  after dipping as low as 150.40 yen earlier in the session. It
  had closed at 151.05/15 yen the previous day.
      The dollar had plumbed a post-World War II low of 149.98
  yen on January 19 and reached a seven-year low of 1.7675 marks
  on January 28. It ended that day at 1.7820/30 marks.
      The Fed noted that, after trading steadily throughout
  November and the first half of December, the dollar moved
  sharply lower until the end of January.
      It closed the three-month review period down more than 11
  pct against the mark and most other Continental currencies and
  seven pct lower against the yen and sterling. It had fallen
  four pct against the Canadian dollar.
      During the final days of January, pressure on the dollar
  subsided. Reports of the U.S.-Japanese intervention operation
  and talk of an upcoming meeting of the major industrial
  countries encouraged expectations for broader cooperation on
  exchange rate and economic policy matters, the Fed said.
      Moreover, doubts had developed about the course of U.S.
  interest rates. The dollar's swift fall had raised questions
  about whether the Fed would let short-term rates ease.
      Thus the dollar firmed to close the period at 1.8320 marks
  and 153.70 yen. According to the Fed's trade-weighted index, it
  had declined nine pct since the beginning of the period.
      The dollar had risen as high as 2.08 marks and 165 yen in
  early November.
      The Fed last intervened in the foreign exchange market on
  November 7, 1985 when it bought a total of 102.2 mln dlrs worth
  of marks and yen.
      The Fed's action followed the September 1985 Plaza
  agreement between the five major industrial nations under which
  they agreed to promote an orderly decline of the dollar.
  

