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CURRENCY : Talk of Props Gives Dollar Modest Boost

December 24, 1987|Associated Press

NEW YORK — The dollar rose modestly in light activity Wednesday as a statement in support of the U.S. currency by the seven major industrial nations had only a small effect on trading.

Gold prices were narrowly mixed. Republic National Bank of New York reported a bid of $483.35 for an ounce of gold as of 4 p.m. EST, down $1.25 from late Tuesday's $484.60.

Analysts said the dollar moved in a narrow range in very light pre-holiday trading.

The industrial nations known as the Group of Seven--the United States, Britain, Japan, France, Italy, Canada and West Germany--issued a statement late Tuesday saying that the dollar had fallen far enough and that the Allies would take unspecified steps to prevent its further decline.

The statement said the dollar's stability was in the countries' "common interest."

The dollar rose narrowly in early trading in response to the statement but later slipped back as traders had a closer look, said James Vick, a vice president at Manufacturers Hanover Trust Co.

Rose Overseas

Analysts said the statement in effect renewed the thrust of an agreement reached last February in Paris, known as the Louvre accord, in which the major industrial democracies agreed to take steps to stabilize exchange rates around then-current levels.

The dollar has fallen by about 50% against the West German mark and the Japanese yen since mid-1985, reaching new lows in the weeks since the Oct. 19 stock market collapse.

The dollar rose overseas Wednesday after British Chancellor of the Exchequer Nigel Lawson said he thought that the currency was undervalued and that the United States might need higher interest rates to finance its trade and budget deficits.

European dealers said Lawson's remarks had greater effect than the Group of Seven statement.

The statement was underlined by West German Finance Minister Gerhard Stoltenberg saying that a further fall of the dollar could be damaging to the world economy. Those remarks also helped support the dollar.

In Tokyo, the dollar closed at 126.55 Japanese yen, unchanged from Tuesday. Later in London, the dollar traded at 126.85 yen, up from 126.80 Tuesday, and in New York, the dollar rose to 126.65 yen from 126.40 yen late Tuesday.

One British pound cost $1.8205 in London, cheaper for buyers than Tuesday's late $1.8290. The pound also slipped in New York, falling to $1.8255 from $1.8340 late Tuesday.

Other late dollar rates in New York, compared to late Tuesday's prices, included: 1.6335 West German marks, up from 1.6275; 1.3285 Swiss francs, up from 1.3220; 5.5275 French francs, up from 5.5060; 1,202.00 Italian lire, up from 1,197.50, and 1.30695 Canadian dollars, up from 1.30595.

Gold Falls in New York

Other late rates in Europe, compared to late Tuesday's rates, included: 1.6390 West German marks, up from 1.6285; 1.3320 Swiss francs, up from 1.3255; 5.5425 French francs, up from 5.5160; 1.8440 Dutch guilders, up from 1.8370; 1,204.125 Italian lire, up from 1,199.75, and 1.3065 Canadian dollars, up from 1.3049.

Gold bullion fell on the Commodity Exchange in New York to $482.90 from $483.90 late Tuesday.

Gold closed in London at a bid price of $482 an ounce, down from $482.40 late Tuesday. The Zurich closing price was $483, down from $483.50.

Earlier in Hong Kong, gold closed at a bid price of $485.33 an ounce, up from $482.60.

Silver fell to $6.73 an ounce on the Commodity Exchange from $6.808 late Tuesday. In earlier London trading, silver traded at a bid $6.78 an ounce, down from $6.83.

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