Commercial Dollar plummets as gold soars

Press, 16 August 1978, Page 26

Commercial Dollar plummets as gold soars

The United States dollar I slumped to a postwar low of 182 yen on the Tokyo foreign exchange market yesterday morning after its overnight fall against major European currencies. The battered dollar opened trading at 182.70 yen, but fell almost immediately to 182 on heavy selling pres-1 sure from both foreign and I Japanese banks, dealers said. No central bank intervention was detected in early trading to support the American currency, which has lost more than 115 yen in value in the last 'lB months.

On European currency markets the dollar sank and the price of gold soared from record to record as dealers turned to metal to escape the uncertainties of the currency crisis. The dollar hit record low levels against the German mark, Swiss franc, and Dutch guilder, but gold reached a price of $214.60 an ounce — more than $7O an ounce higher than the price of gold a year ago. For a brief spell the dollar was helped by an announcement that natural gas had been discovered off the United States coast beneath the Atlantic. The. U.S. currency recovered slightly, but then continued its fall. » The dollar’s troubles brought a warning from Japan’s External Economic Affairs Minister (Nobuchiko Ushiba) who told Reuters in

an interview that the United States should be taking a more serious,view of dangers posed by the decline of its currency. Mr Ushiba said there were a variety of both classical and unorthodox measures which the United States could take to prop up the dollar, including a move toI wards wage and prices controls to curb inflation. Mr Ushiba said the United States could also step up foreign exchange market intervention in support of the dollar and activate the existing two billion dollar currency swap-line between the New York Federal Reserve Bank and the Bank of Japan to provide ammunition for intervention in the yen-dollar market.

Mr Ushiba added that Japan was very concerned by the latest rise in the value of the yen — in which he said speculation played a big role — and would welcome in particular dollar support action taken by the United States in conjunction I with Europe and Japan. The Texaco oil company I has announced that a drillling platform 100. miles off the coast of New Jersey had made a “significant” discovery of natural gas — the first petroleum find along the American northeast coast. But Texaco emphasised that a lot’ of work would still be needed to determine whether the find in the Baltimore canyon area meant

gas could be extracted in large enough quantities to make the project commercially feasible. “We feel a lot better (about the prospects) today than we felt a few days ago,” said a Texaco executive. Texaco said the gas almost pure methane flowed at an estimated daily rate of 7.5 M cubic feet from a 38foot interval at depths around 14,000 feet.