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Dollar Slides on Letdown From U.S.-Japan Talks : Investors Disappointed at Leaders' Lack of Progress on Deficit, Trade Problems

May 05, 1987|From Times Wire Services

NEW YORK — The dollar fell against other currencies Monday as investors registered their disappointment that the summit talks between the United States and Japan last week did not produce concrete measures to solve trade problems, dealers said.

Gold prices rose. Republic National Bank in New York quoted gold bullion at $462.50 an ounce late Monday, up from $457 late Friday.

U.S. Commerce Undersecretary Bruce Smart underscored investors' fears with his remark that Prime Minister Yasuhiro Nakasone's visit to Washington last week disappointed U.S. officials, who had hoped Japan would be more forthcoming in trade liberalization proposals.

"People were waiting for an excuse to pounce, and the Smart comment provided it," said one trader at a top European bank.

"There's nothing to hold it up," Ron Sapiro, head foreign exchange trader with Continental Illinois National Bank & Trust Co. in Chicago, said of the dollar. "The scenario for the dollar is still lower."

Decline in Dollar Expected

Analysts said statements last week from the White House and Federal Reserve Board Chairman Paul A. Volcker in support of the dollar had not been enough to stabilize the currency.

The analysts added that traders believe the dollar will continue to decline, despite efforts by the U.S. government and central banks in other countries.

Trading was light in Europe as markets in London and Tokyo closed for national holidays.

In Europe, foreign exchange dealers said the West German Bundesbank bought an unspecified amount of dollars on the open market when the U.S. currency fell below 1.7750 West German marks, but the intervention only temporarily halted the dollar's slide.

The dollar closed at 1.7695 West German marks in Europe, down from 1.7815. In later New York trading, the dollar was quoted at 1.7640 marks, down from 1.7765 late Friday.

On the European continent, the British pound rose from $1.6680 late Friday in London to $1.6810, its highest level against the dollar since November, 1982. In New York, sterling rose to $1.6842 from $1.6740 late Friday.

The dollar traded at 139.90 Japanese yen in Europe and later in New York slipped to 138.40 yen from 140.10 yen late Friday.

Other late dollar rates in New York, compared to Friday's, included: 1.4460 Swiss francs, down from 1.4560; 5.95125 French francs, up from 5.9335; 1,262.75 Italian lire, down from 1,272.50, and 1.34635 Canadian dollars, up from 1.34175.

Other late dollar rates in Europe, compared to late rates in London on Friday, included: 1.4515 Swiss francs, down from 1.4600; 5.9300 French francs, down from 5.9500; 2.0050 Dutch guilders, down from 2.0110; 1,273.375 Italian lire, down from 1,279.50, and 1.3457 Canadian dollars, up from 1.3375.

On the Commodity Exchange in New York, gold bullion for current delivery closed at $462.80 an ounce, up from $457.10 late Friday.

Gold bullion rose in Zurich to a late bid of $457.70 an ounce from $454 bid late Thursday. On Friday, when the Zurich market was closed, gold was quoted in London at a late bid of $454.25.

Earlier in Hong Kong, gold edged down to a closing bid of $456.43 from $456.44 bid at Saturday's close.

Silver for current delivery jumped to $8.685 on New York's Comex, up from $8.167 late Friday.

With bullion markets closed in Britain, there was no London quote.

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