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CURRENCY : Intervention Lifts Dollar; Gold Prices Finish Lower

January 12, 1988|Associated Press

NEW YORK — The dollar finished slightly higher against most major currencies Monday after its fall was broken again by central banks intervening to support it.

Gold prices declined in New York after nudging higher in Europe and the Far East. Republic National Bank of New York quoted a bid price for gold of $481.80 an ounce at around 4 p.m. EST, down from $483.75 late Friday.

The dollar started the trading day by tumbling in Asia and Europe amid renewed stock market jitters sparked by Friday's precipitous drop on Wall Street. But several major central banks stepped in to bolster the dollar in a coordinated move, as they had during the early part of last week, causing the U.S. currency to recover.

Currency dealers reported interventions to purchase dollars in the open market by the West German Bundesbank, the U.S. Federal Reserve, the Bank of England, the Swiss National Bank and the Banca d'Italia. The West German and Swiss central banks confirmed their interventions.

The banks' actions "sort of exhausted the urge to sell dollars," said Robert Hatcher, vice president of corporate currency trading at Barclays Bank's New York office.

Traders said the dollar also was supported later in New York trading by President Reagan's statement Monday that there will not be an economic recession unless "doom-cryers scare the people into one." Reagan also said the nation's huge trade deficit--blamed in part for the turbulence on Wall Street and a major factor in the dollar's recent slump--is desirable and "a sign of strength" instead of weakness in the economy.

Deficit Hurting Sales

The overall outlook for the dollar remains bearish, however, dealers said. Speculation was rife in the currency market that the U.S. trade figures for November, due to be released Friday, would show a mammoth deficit of around $20 billion.

"The market's going to have to see some evidence of a narrowing of the trade deficit before (it) buys dollars again," said Gary Dorsch, a senior analyst for LNS Financial Group in Chicago.

In Tokyo, where the global trading day begins, the dollar ended a four-day climb, falling to 128.50 Japanese yen from 129.45 yen at Friday's close. Later in London, it slipped to 128.08 yen. By the end of New York trading, the dollar was quoted at 128.45 yen, up marginally from 128.35 yen.

The British pound rose to $1.8230 in late trading from $1.8070 late Friday. Later in New York, the pound edged up to $1.8190 from $1.8182.

Other late dollar rates in New York, compared to late Friday, included: 1.6395 West German marks, up from 1.6365; 1.3400 Swiss francs, up from 1.3395; 5.5355 French francs, up from 5.5250; 1,205.50 Italian lire, down from 1,210.75, and 1.2867 Canadian dollars, down from 1.2877.

Other late dollar rates in Europe included: 1.6355 West German marks, down from 1.6500; 1.3348 Swiss francs, down from 1.3495; 5.5215 French francs, down from 5.5725; 1.8370 Dutch guilders, down from 1.8575; 1,203.95 Italian lire, down from 1,214.75, and 1.2900 Canadian dollars, up from 1.2852.

Gold rose in London to a late bid price of $483.50, up from $482.50 bid late Friday.

Tables, Page 12

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