Sterling in decline

Press, 5 August 1985, Page 34

Sterling in decline

NZPA-Reuter London Sterling was hit by speculation on currency markets on Friday for the second day running, falling further against the dollar and other leading European currencies amid renewed talk of higher Saudi oil output and lower prices. Sterling was quoted 1.65 cents lower at JU51.3670 at the close of trading in Europe, and four pfennigs down at 3.8618 German

marks. Against a basket of 17 currencies, it shed one percentage point to stand at 81.1 per cent of its 1975 value. Currency experts, Paul Chertkow and Jim O’Neill, of International Treasury Management, said that sterling could recover in the short-term if interest rates remained firm. But, they added: “We do believe that eventually continued weakness of crude oil prices will

undermine confidence in sterling.” Traders said the dollar remained on the sidelines, helped by news that the U.S. Congress had finally agreed a budget plan for 1986. But they said the weaker dollar trend would continue as Federal Budget deficits would remain too high. The dollar closed in Frankfurt at 2.8260 marks, slightly higher than its finishing level there on Monday of 2.82 but little changed from its opening level in Europe last Monday. Latest US unemployment figures from Washington showing no change in the jobless rate at 7.3 per cent knocked the dollar off its day’s high earlier of 2.8340 marks. In Sydney the Australian dollar finished steady at SUS7IIS/22 from its 0.7105/12 opening on Friday, but down from Thursday’s 0.7250/57 close. Dealers said the market tone was nervous after the currency failed to recover from a selling bout in early London trading yesterday. The Australian dollar peaked at JU50.7174 in active trading and was well supported at JU50.7150. But end of week book squaring in the afternoon session pushed the unit lower ahead of a New South Wales bank holiday today.