$US firm but sAust at record lows

Press, 28 July 1986, Page 32

$US firm but sAust at record lows

PA New York The U.S. dollar rose against most other major currencies in U.S. and European trading today as dealers continued to reevaluate their outlook for the American economy. Gold prices were mixed within a narrow range. The dollar’s upturn, added to gains it recorded earlier last week, have allowed the currency to rebound somewhat from its extended slide in the first three weeks of July.

The dollar had been under severe pressure from growing pessimism about the U.S. economy’s strength, and from declines in American interest rates, which reduced the attractiveness of dollar-denominated investments.

But demand for dollars picked up this week after government statistics signalled that the economy might not be as sluggish as previously thought, which surprised currency dealers and prompted many of them to re-evalu-ate their stance toward both the economy and the dollar.

In London the Australian dollar plunged to a modern-day record low on Friday against both the U.S. dollar — just over 60 cents — and against the pound sterling.

The A.N.Z. bank fixed the . sterling-Aust dollar midrate at 2.4675, and 0.6023 against the American currency.

The slide in the Australian dollar, coincident with Treasurer Paul Keat-

ing’s infamous “banana republic” warning, took it to a low of 2.4300 on July 3, after which it steadied and improved and then plunged to a new low of 2.4645 last Tuesday. “I’m not sure when you hail a new record,” said one broker in Australian shares. “Last Tuesday it sank to 2.4700 before the midrate of 2.4645, and people who were around before decimal days in 1966 reckon it once went down to 2.5000.” The market devaluation was caused by continuing nervousness about the Australian economy, thb dealer said, adding that the Reserve Bank of Australia had apparently intervened three times in 24 hours to offset Japanese and American selling on the bond market.