$US closes firmer

Press, 24 February 1986, Page 20

$US closes firmer

PA New York The U.S. dollar ended the week higher, although it moved back from its earlier London levels.

Dealers said trading was light, with many refusing to commit themselves ahead of the weekend. Analysts said the markets were still trying to. sort out conflicting comments from the Federal Reserve and the Department on the proper level for the U.S. currency. The dollar ended a volatile week that saw the currency hit seven-year lows against the Japanese yen and a three-year low compared to the West German mark.

The secretary of the U.S. Treasury, James Baker, said on Wednesday that the dollar still had room to fall, while the Federal Reserve chairman, Paul Volcker, warned of the ramifications of a continued sharp fall in the dollar. “The markets are focusing more on what Baker said in his testimony,” a dealer said.

The dollar closed at 182.40 yen, up sharply from a previous close of 179.95 yen, although below Thursday’s high in London of 183.30 yen.

Dealers said tne dollar was buoyed by renewed rumours of a cut in the Japanese bank discount rate.

The Japanese Prime Minister, Yasuhiro Nakasone’s statement that the dollar had reached a bottom against the yen touched off a morning bout of buying, dealers said.

A cut in Japanese interest rates would make the yen less attractive to investors. It would also signal to speculators that the Japanese government believes the dollar, which has dropped 25 per cent against the yen since September 20, has fallen far enough. The dollar closed slightly higher against the West German mark, at 2.2970 marks, up slightly from 2.2930 previously but below the day’s high of 2.3180 marks. For the week, the dollar lost 4.5 pfennigs.

The Swiss franc also lost some ground to the dollar

after the dollar fell through the two-franc floor. The US currency closed at 1.9215 francs compared with 1.9100 francs previously. The British pound was slightly lower, closing at $U51.4545 against $U51.4550 previously.