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DOLLAR RISES AGAINST CURRENCIES IN EUROPE, FALLS AGAINST THE YEN

SHARE DOLLAR RISES AGAINST CURRENCIES IN EUROPE, FALLS AGAINST THE YEN

The dollar gained on the German mark and other European currencies Friday on rising expectations about another Federal Reserve Board interest rate increase.

The dollar fell moderately against the yen but still floated above the 100-yen level. Traders said large Japanese exporters were in the market selling dollars and that the currency's strength may have been tempered by concerns about the Orange County, Calif., bankruptcy filing.The dollar gyrated during the day, rising on speculation that the Fed will raise rates for a seventh time this year after a Dec. 20 meeting of its Federal Open Market Committee.

Higher rates increase the dollar's attractiveness because they raise demand for U.S. investments and the currency to buy them.

Fed Chairman Allan Greenspan suggested this week that the central bank is not through raising rates because the economy continues to expand, which can generate inflation.

The dollar slipped amid rumors that European central banks were selling dollars to adjust year-end reserve levels. Dealings tapered as the day ended, and some traders said the dollar's seven-week rally may be losing steam.

"It's rally exhaustion," said Kevin Lawrie, foreign exchange manager and vice president at Mellon Bank in Pittsburgh.

Other traders said the dollar had hit technical resistance levels and might be feeling some effects of investor worries about the Orange County bankruptcy.

Losses in the investment fund of the nation's fifth-largest county caused it to seek protection from creditors, and the county missed a payment on a $110 million pension bond.

The events do not have a direct impact on the dollar. But they make international investors nervous about the U.S. financial markets, said Tom O'Malley, foreign exchange analyst at Technical Data in Boston.

"This tempers the dollar's rise," said O'Malley.

In late New York trading, the dollar was quoted at 100.11 Japanese yen, down from 100.49 late Thursday. In London, the dollar closed at 100.20, down from 100.40.

The dollar also was changing hands in New York at 1.5771 German marks, up from 1.5767. In London, the dollar closed at 1.5780 marks, up from 1.5770.

Other late dollar rates in New York, compared with late Thursday: 1.3370 Swiss francs, up from 1.3360; 5.4160 French francs, up from 5.4115; 1,630 Italian lire, up from 1.627; and 1.3838 Canadian dollars, up from 1.3818.

The British pound was quoted at $1.5605, down from $1.5636. In London, the pound fell to $1.5600 from $1.5635.