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Dollar Edges Higher in Wake of Pact to Stabilize Value; Gold Prices Mixed

February 24, 1987|Associated Press

NEW YORK — The dollar edged higher Monday in light trading against most major currencies following a weekend agreement by the United States and five of its key trading partners to help stabilize exchange rates.

Gold prices were mixed. Republic National Bank in New York quoted a bid of $402.50 an ounce as of 4 p.m. EST, down from $405.75 late Friday.

Currency dealers said the market failed to test Sunday's agreement in Paris by the six major industrial nations to stabilize rates near current levels for an unspecified time.

At the meeting, finance ministers from the United States, Britain, France, West Germany, Canada and Japan signaled their readiness to intervene to steady the dollar, which has lost more than 40% of its value against major currencies since 1985.

"I think the market is very hesitant," Ronald Sapiro, head trader for Continental Illinois National Bank in Chicago, said of Monday's activities. "The market would like to sell dollars, but it's afraid to sell in case of intervention."

Larry Kreicher, an economist with Irving Trust Co. in New York, agreed. "No one wants to challenge the central banks today, although I suspect it will be forthcoming," he said.

Kreicher and other economists said the market may find its "excuse" for challenging the weekend agreement after the government releases fresh data on the U.S. economy this week. A report on January durable goods is due out today, and January's merchandise trade figures are expected Friday.

"If the economy doesn't start picking up further . . . there will plenty of reasons for selling the dollar," Sapiro said.

The Paris accord marked the first time the U.S. government endorsed the view of the Europeans and Japan that the dollar had fallen far enough and that further declines would endanger the world economy.

The dollar rose against most major currencies except the Japanese yen and British pound.

In Tokyo, the dollar fell to a closing 153.55 yen from Friday's 153.77 yen. Later, in London, it was unchanged at 153.55 yen. In New York it traded for 153.68 yen, up from 153.25 yen Friday.

Falls Against Pound

The dollar fell against the British pound, which rose to $1.54 from $1.53 late Friday. In New York, sterling fetched $1.5395, compared to $1.53775.

Other late dollar rates in New York, compared to late Friday, included: 1.8390 West German marks, up from 1.8170; 1.5545 Swiss francs, up from 1.5350; 1.33305 Canadian dollars, up from 1.32925; 6.1230 French francs, up from 6.0525, and 1,306.70 Italian lire, up from 1,297.00.

Gold rose in light European trading, partly boosted by Brazil's decision to suspend interest rate payments on foreign loans, but it turned lower in New York.

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