$US up on lower inflation hopes

Press, 1 February 1988, Page 27

$US up on lower inflation hopes

NZPA-AP New York The U.S. dollar jumped higher against most major currencies on Friday, responding to what analysts said were continued signs of mild inflation and a possible improvement in the nation’s trade deficit. Gold prices fell sharply in response to the stronger dollar and low inflation speculation. Republic National Bank in York quoted gold

bullion at $U5454.50 a troy ounce, down 5U512.50 from the same time on Thursday.

Foreign exchange analysts attributed the dollar’s strength to recent signs that the U.S. economy was slowing and inflation remained moderate.

The Government report on Wednesday of sharp growth in the nation’s gross national product during late 1987 also indicated that

spending — a key component of economic growth — slowed sharply. The report also indicated that inflation remained moderate during the fourth quarter, a trend that increases the attractiveness of dollar-denominated investments. Gary Dorsch, of LNS Financial Group Inc. in Chicago, said a slow economy also could reduce domestic demand for imports that have become more expensive because

of the weakening of the dollar over the past three years. A stronger trade performance would reduce pressure for a weaker dollar, he said. The dollar traded at 127.975 Japanese yen in New York, up from 127.025 on Thursday. Earlier in Tokyo, the dollar began the trading day by rising to 127.18 Japanese yen from 127.05. The British pound decided to 5U51.7710 in

London from 1.7790. Sterling also fell later in New York, dipping to 5U51.7665 from late Thursday’s 1.7829. Late dollar rates in New York, compared with late Thursday’s rates, included: 1.68125 West German marks, up from 1.66675; 1.37005 Swiss francs, up from 1.35615; ,1.27525 Canadian dollars,' down from 1.27705; 5.6665 French francs, up from 5.6175; and 1237.75 Italian lire, up from 1230,35.