U.S. dollar up on currency markets

Press, 10 January 1983, Page 24

U.S. dollar up on currency markets

NZPA London The American dollar opened firmly but tumbled in late trading in Europe on Friday on expectations of a cut later in the day of the Federal Reserve Board’s discount rate. Gold bullion rose SUSI2 an ounce in London and $4 an ounce in Zurich. London and Frankfurt dealers said the dollar’s decline after a firm opening, which began in New York the day before, came after persistent report of an im-

minent cut by the United States federal reserve system of its discount rate from the present 8.5 per cent. Many believed the cut, which would be likely to bring down other lending rates, would come later on Friday.

The dollar carried forward its strong showing in New York to Tokyo, where trading ends before it begins in Europe, and this was reflected in early business in London.

In Europe, the British pound managed to edge up from $U51.6070 to $1.6075 but weakened further in relation to other currencies. Gold and silver bullion rose strongly in London as often happens during times of uncertainty in monetary markets.

Sterling slipped to a twoyear low against major foreign currencies on Thursday amid new unease about the outlook for the British economy. More than a cent was clipped off sterling in London in early trading to bring it down to $U51.6115, its lowest level for five years. The new pressure on sterling coincided with the publication of a record unemploy-

ment figure of 13.3 per cent of the workforce and a new prediction of a bleak economic outlook for 1983.

But the main single factor, according to dealers, was uncertainty over how oil prices will stand up in the face of a world oil glut and how this will affect Britain as an oil producer. Recent downward pressure on sterling intensified last month and the Bank of England had to buy sterling heavily to stem its slide, especially against the West German mark.

This helped cut the nation’s reserves to SUSI 7 billion, down from $23.4 billion a year ago, its lowest level since Prime Minister Margaret Thatcher took office in May, 1979.