DOLLAR SLIDES AS RUSSIAN CALM TRIGGERS PROFIT TAKING

DOLLAR SLIDES AS RUSSIAN CALM TRIGGERS PROFIT TAKING

The U.S. dollar declined Wednesday as Russia appeared calm and traders took profits from Tuesday's rally.

The political turmoil in Russia sparked a strong dollar rally Tuesday on safe-haven buying.Dealers said that while the market awaited news from Russia Wednesday, it was taking profits from Tuesday's big run-up, which occurred after Russian President Boris Yeltsin dissolved the nation's Parliament.

"It was a knee-jerk reaction Tuesday, and now we're taking profits," a chief dealer said. "Of course we're not out of the woods yet; anything can happen, but as for now, it's quiet, the army hasn't moved, and we're just awaiting news."

Foreign exchange analyst Amy Smith of the advisory firm I.D.E.A. Inc. said the market was relieved that the Russian deadlock remained peaceful.

"The market's breathing a sigh of relief because the main concern was whether the Russian military would step in, but so far it has pledged its neutrality. Mr. Yeltsin has vowed not to use force and so has the other side," Ms. Smith said.

The deutsche mark remained somewhat vulnerable against other European currencies because Germany is Russia's biggest creditor, Ms. Smith said.

"The thinking is this may be an ongoing parliamentary crisis that could be settled without bloodshed. But you never know; and the market remains on edge," she added. She noted that gold - the traditional safe haven - fell almost $9 an ounce Wednesday morning after rising $9.50 Tuesday.

The dollar softened against the yen on comments from U.S. Treasury Secretary Lloyd Bentsen that U.S. foreign exchange intervention will be limited to times of dramatic market volatility. But the Bank of Japan intervened near the 106-yen level Wednesday, aiding the dollar.

Mr. Bentsen, speaking after an address to the Economic Club of New York Tuesday night, said he thought exchange rates should be supported by economic fundamentals and not by "some manipulation of government."

The yen traded erratically Wednesday because of rumors about progress or lack of progress on the preliminary trade talks between the United States and Japan, said foreign exchange analyst Tom Hoge of Credit Suisse.

The British pound was boosted by a narrowing of Britain's August visible trade deficit with countries outside the European Community.