The intervention did help the dollar rebound and did stop the fall of some stock markets yesterday.

The dollar rebound was aided by Mr. Tietmeyer, who was quoted as saying he did not foresee a weaker dollar.

But if the dollar rebounds or the economy sags, inflationary fears would abate and so would the pressure on interest rates.

"They even mentioned that they didn't want to see a strong dollar rebound."

A plant that might be cost-competitive in the world market with the dollar at its current low level could easily become a money-loser if and when the dollar rebounds.

Many gains in comparative cost that American companies have made against the Japanese can be traced to the rise of the yen and could be wiped out if the dollar rebounds.

But the Chancellor may be looking and hoping further ahead, to Friday's US employment report and the possibility that a bit of a dollar rebound might haul the pound up against the mark.

Periods when the dollar rebounds have often brought higher bond prices.

The switch to negotiating contracts in euros should provide some protection for El Corte Inglés if the dollar rebounds.

On the reverse side of it, if the dollar rebounds, it will again take some time for servicemembers to see a reduction in their COLA.