More selling of U.S. dollar

Press, 26 September 1984, Page 29

More selling of U.S. dollar

NZPA-AP New York The United States dollar turned on a mixed performance on Monday, with dealers reporting extreme volatility in foreign-ex-change rates because of trader fears of heavy central bank intervention against the dollar. “People are stunned,” said Mary Ogata, senior vice-president and treasurer at the Union Bank in Los Angeles. “Everybody is scared.”

The American Treasury Secretary, Mr Donald Regan, refused to say whether the United States was intervening in the currency markets, but added he did not want “to try to drive the dollar down.”

Gold began rising on Friday as the dollar plummeted, but bullion prices stabilised in quiet trading on Monday. The dollar retreated quickly on Friday, its biggest one-day slide for more than three years. The selling was attributed in large part to heavy sales of dollars by the West German central bank, the Deutsche Bundesbank, which confirmed additional dollar sales on Monday and rumours surfaced that other central banks were acting in concert to under cut the dollar.

Asked at a news conference if the United States had intervened, Mr Regan repeated that American policy is to step in to currency markets “if in our judgment they are disorderly or erratic and we stand ready to do that at any time in our judgment that happens.” Mr Daniel Holland, an assistant vice-president at

the Discount Corporation in New York, spoke of "very disorderly” currency markets, with wide spreads between the exchange rates quoted by different dealers and large banks reluctant to set prices on currencies. Before Friday’s fall, the dollar had climbed to record levels against the currencies of Britain, France, Italy, Spain, Denmark, Sweden, and Norway, had reached a 13-year high against the Dutch guilder, an 11-year high against the West German mark, and a seven-year high against the Swiss franc, Mr Karl Otto Poehl, head of the Deutsche Bundesbank, confirmed that West Germany sold about SUS4SOM on Friday to help reduce the dollar’s strength. He said in Washington that the bank had intervened again in the currency markets just “a little bit” on Monday in a sale of dollars that he characterised as “nothing spectacular.” By the end of the trading day in New York, the British pound was quoted at 5U51.2470, against $1.2520 late on Friday, and the dollar stood at 244.63 Japanese yen, a slight improvement from Friday’s late rate of 244.40 yen. Other dollar rates in New York included: 3.0330 West German marks, down from 3.0450; 2.5035 Swiss francs, up from 2.5010; 9.3200 French francs, down from 9.3700; and 1.3166 Canadian dollars, up from 1.31525. On the New York commodity exchange, gold for current delivery fell SUSI.BO to close at $U5345.50 an ounce.

In Wellington, the United

States dollar eased slightly on the foreign exchange market yesterday. After opening at 3.0390/40 marks the dollar went higher when the Asian markets opened, but eased back to 3.0360/70 at the end of the day.

The yen was stable against the dollar, staying around 244.50 all day and ending at 244.50/60. Sterling opened at 1.2425/35 United States dollars and dropped to a low of 1.2400 but picked up later in the day to end at 1.2440/50.

Dealers said that after the erratic trading of recent ’days the market opened nervously and the spreads in the major currencies were wide, but they moved back to normal by the end of the day. They said the market was generally quiet and no new trends were discernible. The New Zealand dollar traded in only a six point margin finishing at 0.4885/ 88 United States dollars. The Reserve Bank mid-rate at 0.4888 closed down three points from its opening. The New Zealand dollar fowards market moved out to 35/45 against the United States dollar in the three months range as a result of steady business.

The Australian dollar traded in a range between 0.8295 United States dollars and 0.8320. It closed at 0.8305/10.