NEW YORK — The dollar closed lower Wednesday, failing to benefit from a well-anticipated increase in U.S. banks' prime lending rates, dealers said.
Banks raised their prime rates to 9.25% from 8.75% at mid-morning--the second such increase in just over a month. But the dollar had already embarked on a downward course during overseas trading.
"The prime rate rise didn't correlate. There was so much selling pressure overnight on the dollar," one trader said.
Gold prices were mixed. Republic National Bank in New York quoted a bid of $458 for an ounce of gold as of 4 p.m. EDT, up from $457.25 late Tuesday.
There was little news to affect the dollar while traders await the release next week of the latest U.S. balance of trade figures, said Ronald Holzer, chief foreign exchange dealer at Harris Trust & Co. in Chicago.
"We're still in technical trading here with very defined ranges," Holzer said.
Earlier Wednesday, the dollar slipped in the Far East and Europe because of technical factors as well as continued unease over modest increases in money-market rates in West Germany and Japan, dealers said.
Some market participants believe that a marked narrowing of the differential between U.S. and overseas interest rates will diminish the allure of dollar-denominated investments.
British Pound Gains
In Tokyo, where the business day ends as European trading opens, the dollar declined against the Japanese yen for the second consecutive day. It closed at 146.43 yen, down from Tuesday's close of 147 yen. In later London trading the dollar was quoted lower at 145.65 yen and in New York, the dollar fell to 145.19 yen from 146.84 yen.
It cost $1.6395 to buy one pound in London on Wednesday, making it more expensive than $1.6315 quoted late Tuesday. In New York, the pound rose to $1.64375 from $1.6337.
In London, Chancellor of the Exchequer Nigel Lawson called $1.64 a "very satisfactory rate" for the British pound.
Other late dollar rates in New York, compared to late Tuesday, included: 1.82275 West German marks, down from 1.83285; 1.52125 Swiss francs, down from 1.5303; 6.0685 French francs, down from 6.10025; 1,1314.75 Italian lire, down from 1,323.375, and 1.30375 Canadian dollars, unchanged.
Other late dollar rates in Europe, compared to late Tuesday, included: 1.8260 West German marks, down from 1.8340; 1.5250 Swiss francs, down from 1.5275; 6.0787 French francs, down from 6.1037; 2.0555 Dutch guilders, down from 2.0625; 1,317.50 Italian lire, down from 1,323.50, and 1.3060 Canadian dollars, up from 1.3055.
Gold rose on the Commodity Exchange in New York to $458.10 an ounce from $457.50 late Tuesday.
Gold edged up in London to $458 from $457.50.
The precious metal dipped slightly in Zurich, closing at $457.50, compared to $458.