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FEDERAL RESERVE BUYS DOLLARS IN ATTEMPT TO SLOW SLIDE

The United States tried for a second time this week to signal its desire for a stronger dollar by authorizing purchases of the U.S. currency by the Federal Reserve.

A spokesman for Treasury Secretary Robert Rubin announced the dollar-buying in a brief statement read to reporters at the Treasury Department.Today's effort followed massive intervention in currency markets to buy dollars estimated by traders at between $1.5 billion and $2 billion on Monday.

Despite the size of Monday's intervention, which may have set a record for a single day of dollar-buying by the Federal Reserve, the U.S. currency has remained under heavy downward pressure.

That pressure intensified today after German Finance Minister Theo Waigel dampened speculation that the United States and its major allies, known as the Group of Seven countries, might be preparing to jointly intervene in currency markets to purchase dollars.

"In view of the size and close integration of markets, I regard it as an illusion to believe that governments and central banks can stand against the markets in the long term," Waigel said in a speech to German bankers in Bonn.

"One thing has shown itself again and again: The causes for currency crisis lie within the countries affected," Waigel said.

After Waigel's comments were transmitted to currency trading rooms in Europe, the dollar started to tumble against both the German mark and the Japanese yen.

So far, the turmoil in currency markets has yet to adversely affect the U.S. stock and bond markets. But many economists warn that there will come a point when foreign investors will no longer be willing to hold dollar-denominated assets because of the losses they are suffering.