Currency report

Press, 14 April 1980, Page 20

Currency report

The U.S. dollar lost all its recent gains in a sharp reaction in a thin and nervous market, according to the weekly foreign exchange re* p6rt from the Bank of New South Wales.

The latest developments in the united states hostages crisis did not initially affect the dollar adversely, although gold was firm on the news.

The later decline could have resulted from a reassessment of the dollar’s position in the light of a generally worsening Middle East situation; the decline could equally have been largely technical reflecting long liquidation on the vieW that U.S. interest rates, which have been the main underpinning factor in the dollar’s recent strength, are at last peaking. Eurodollar deposit rates fell about 5/16 percentage

point during the week, a sizeable move, but one which did little to eliminate the large differential with continental European rates, the bank said.. However, towards the end Of the week Calm returned td the international money markets, and the dollar began a modest recovery. The confusion and hectic dollar trading obscured the move in Sterling, which almost unnoticed, fell sharply against continental European currencies and lost 0.8 on its trade weighted index to close at 72.1. In the European monetary system, the recent strains continued. The Belgian franc, the weakest currency, ended the week below its intervention point, and the mark continued weak in the system despite its strong recovery against the dollar. .