$US dips: $Aust high

Press, 9 May 1985, Page 30

$US dips: $Aust high

NZPA-Reuter London The American dollar dived sharply in hectic trading on European foreign exchangeson Tuesday (early yesterday morning, N.Z. time) as speculators who had fuelled the currency’s recent recovery began to have second thoughts about American economic prospects. In Frankfurt, the U.S. dollar opened at 3.2320 marks before falling to a fix of 3.1960, more than five pfennigs below Monday’s 3.2490 marks. By midafternoon it was trading just above 3.18 marks. London dealers said the fall was a correction to the dollar’s recent rise from below three marks, which they said was highly speculative as no firm evidence had emerged that U.S. growth was quickening after a bad showing in the first

quarter. The United States Secretary of Commerce, Mr Malcolm Baldrige, said that the American economy would not grow this year by the 4 per cent previously estimated. The economy grew by an annualised rate of only 1.3 per cent between January and March. The Australian dollar ended higher in Sydney at $U50.6875/ 85 on a day of keen buying as the recent change in sentiment intensified, the dealers said.

This was the unit’s highest close since the start of April, and compares with its record low against the U.S. currency of $U50.6280 April 22. The Australian dollar opened yesterday at $U50.6693/6703 from Tuesday’s $U50.6640/50 close. Dealers said the Australian dollar’s strength was due to a

general change of sentiment in the market ahead of the Federal Government’s economic statement next week.

The Australian currency rose from $NZ1.4711 on Tuesday to $NZ1.5154.

In Wellington yesterday, the Australian dollar traded in a 2c range to reach its high for the day at 5U50.6835/45 in the afternoon. Dealers were baffled at the steady trading in the Australian unit, which they put down to exporter demand. The unit was at $U50.6820/30 in late-afternoon trading compared with its $U50.6690/00 opening. The New Zealand dollar was at $U50.4535/43 compared with $U50.4520/30 in the morning. The yen closed at 252.60/70 compared with its opening in Wellington and close in New York of 253.10/20.