Central Banks Rush to Stabilize Falling U.S. Dollar : Currency: European nations join the Federal Reserve in trying to stabilize the greenback on foreign exchange markets as it nears record lows.

The dollar hovered near record lows on foreign exchange markets Friday but got a slight boost after the Federal Reserve and other central banks bought large amounts of the beleaguered U.S. currency.

The dollar rose to 1.456 German marks in New York trading, just above Thursday’s close of 1.455 marks. Earlier in the week, the dollar hit a postwar low against the German currency and it has barely recovered.

“It’s unlikely that we’ve seen the bottom yet,” said Robert A. White, a vice president at First Interstate Bank in Los Angeles.

The dollar lost some ground against the Japanese yen Friday, finishing at 127.80 yen, compared to 128.40 the day before.

Despite repeated central bank intervention to stabilize the dollar this week, it may be headed lower, analysts said, in light of worries about the U.S. economy. In addition, falling U.S. interest rates lately have made the higher-yielding securities of other nations more attractive to investors.

“We’ve had a very unusual situation developing in which German interest rates and other European interest rates are moving higher, while U.S. rates are moving lower,” said Gary E. Schlossberg, vice president and senior economist at Wells Fargo Bank in San Francisco.

As the greenback approached its postwar lows against the German mark Friday, a handful of central banks jumped into the marketplace at least twice and perhaps three times to prop up the dollar.

Early in the day, 13 European banks, led by Germany’s powerful Bundesbank, began to buy dollars, according to some accounts. The European banks also may have participated in a second round of buying overseas, traders said.

Later, during U.S. business hours, the Fed, the Bank of England, the Bank of France and the Bundesbank were reported to be buying dollars.

“You’d be surprised--the Bank of Spain, the Bank of Greece, the Bank of Portugal all came in,” White said.

The other nations have reason to watch changes in the value of the dollar. A weaker dollar gives U.S. companies a price advantage over foreign rivals. Some traders have interpreted recent comments by U.S. Treasury Secretary Nicholas F. Brady to mean that he would support a further decline in the currency as a way to reduce the U.S. trade deficit.

Still, the central bank purchases, which may have exceeded $300 million on Friday, had limited effect because the forces pushing down the dollar remain powerful, analysts said. In Germany, fears of inflation could result in further interest rate increases, while the recession in this country creates pressure for the Fed to lower interest rates again.

“The rate differentials are widening even further, making dollars less attractive as an investment,” White said.

While it remains unknown how low the dollar could fall, the central bank intervention suggests that the United States and its trading partners would prefer its decline to be orderly, Wells Fargo’s Schlossberg said.

“I think the central banks and the traders are at the point where they’re trying to test each other,” he said.