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CURRENCY : Dollar Mixed; Gold Rises on Inflation Fears

June 03, 1988|Associated Press

NEW YORK — The dollar turned in a mixed performance Thursday in foreign exchange trading in the United States after rising against most major currencies in earlier dealings in Europe.

Gold prices rose sharply in New York after falling earlier in Europe. Republic National Bank in New York quoted a bid for gold of $466.25 an ounce as of 4 p.m. EDT, up $8.75 from $457.50 late Wednesday.

Analysts cited inflation fears, sparked by persistent rises in agricultural commodity prices in recent days, for the precious metal's big gain.

Currency dealers in Europe said the dollar's rise stemmed from the improved U.S. trade performance and firmer U.S. interest rates. They said activity was muted by the closing of West German markets for a national holiday.

But the dollar finished lower in New York against the West German mark, Swiss franc and French franc and higher against the British pound, Japanese yen and Canadian dollar.

Buffeted by Large Sell Orders

Traders in New York said the market was buffeted throughout the session by large orders to sell British pounds and Japanese yen and buy West German marks and Swiss francs, whose value has been driven down against the pound and yen in recent days.

In addition, there were unconfirmed reports that several central banks, including the Federal Reserve, sold dollars early in the session.

"There was widespread talk of it, and the dollar came off its highs. It took some of the steam out of the rally," said James T. McGroarty, vice president for foreign exchange at Discount Corp. of New York.

The dollar closed in Tokyo at 125.68 Japanese yen, up from 125.35 yen at Wednesday's close. Later in London, the dollar reached 126.53 yen. In U.S. trading, the dollar rose to 126.12 yen from 125.425 yen late Wednesday.

The British pound, which touched a six-year high of $1.90 in March, fell to $1.7967 in London from $1.8220 late Wednesday. Later in New York, the pound fell to $1.80435 from $1.81325 late Wednesday.

Late dollar rates in New York, compared to late rates Wednesday, included: 1.72105 West German marks, down from 1.7308; 1.43505 Swiss francs, down from 1.44345; 5.8270 French francs, down from 5.8425; 1,281.75 Italian lira, down from 1,286.62; and 1.23075 Canadian dollars, up from 1.23035.

Other late dollar rates in Europe, compared to late Wednesday, were: 1.7295 West German marks, up from 1.7255; 1.4425 Swiss francs, up from 1.4390; 5.8502 French francs, up from 5.8270; 1.9413 Dutch guilders, up from 1.9330; 1,286.75 Italian lire, up from 1,282.50; and 1.2325 Canadian dollars, up from 1.2319.

Gold prices jumped on the Commodity Exchange in New York, where gold for current delivery rose $9.40 an ounce to $467.

"Inflationary expectations have been increasing," said John Norris, director for precious metals trading at Citibank in New York.

Jeffrey Nichols, president of American Precious Metals Advisors in New York, said increases in other commodities such as soybeans had set the stage for a revival of inflation concerns.

Gold is often purchased by investors as a hedge against inflation.

Earlier in London, gold fell to a late bid price of $454.30 an ounce, down from $456.50 late Wednesday. In Zurich, it dropped to a late bid of $453 from $457 late Wednesday.

The metal closed in Hong Kong at a bid of $455.38 an ounce, down from $458.55.

Silver bullion fell in London to a late bid of $6.73 an ounce, down from $6.79. But silver for current delivery later jumped 44.2 cents an ounce on the Comex in New York to $7.26 an ounce.

Tables, Page 7

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