LONDON — The U.S. dollar posted modest gains against most foreign currencies Wednesday. Gold resumed its rise in Europe following a two-day decline, and gained more than $8 an ounce.
Currency traders in Frankfurt said trading was dominated by speculation over whether West Germany's central Bundesbank would lower the country's discount rate, currently at 3.5%.
A decline in the rate, the interest charged by the bank on loans to financial institutions, could make the dollar a more attractive investment in relation to the West German mark. Traders said there was speculation in both directions.
The dollar was quoted in Frankfurt Wednesday afternoon at 2.0630 West German marks, up from 2.0585 marks late Tuesday.
Other dollar rates compared to late rates Tuesday, were: 1.6735 Swiss francs, down from 1.6783; 6.7475 French francs, up from 6.7325; 2.3280 Dutch guilders, up from 2.3255; 1,421.50 Italian lire, up from 1,419.75, and 1.3865 Canadian dollars, up from 1.3835.