Currency report

Press, 20 October 1980, Page 26

Currency report

The United States dollar strengthened in active trading as U.S. interest rates rose and speculation grew that a cut in official German interest rates is likely- this coming week, according to the weekly-foreigifeexchange report from the "Bank ■ of New South Wales. An apparent reassessment that world oil supplies may be curtailed by the conflict in Iran and ■ Iraq aided the dollar. The U.S. unit was also boosted by Iran’s reported threat to mine the Gulf and the straits of Hormuz if Arab states helped Iraq. Profit taking brought sterling off its earlier high. Expectations of an early cut in U.K. minimum lending rate

which saw U.K. Government bond prices rise up to 1/4 point were reinforced by the industrial production figures underlining the depth of the U.K. recession. The figures showed industrial output falling 2.4 per cent in . Aug- ; ust, and the manufacturing index falling 2.3 per cent to its lowest level for 12 years. The Japanese yen continued to firm. Market sentiment attributed the yen’s strength to improved Japanese oil supplies despite the Iran/Iraq conflict, and good Japanese trade performance. News that the Japanese wholesale price index fell 0.3 per cent in September, the biggest fall for two years, further boosted the currency.