Dollar Slides to Lowest Levels Since Late 1984

The U.S. dollar tumbled Monday to its lowest levels since last fall amid growing pessimism about the strength of the U.S. economy.

Gold bullion prices rose in light trading. Republic National Bank in New York quoted an after-hours bid for gold at $329 an ounce, up $1.25 from Friday’s late bid.

The dollar fell in Europe to its lowest level against the West German mark since last November, while the British pound rose to its highest level against the dollar since last September.

Since reaching record heights in February, the dollar has lost nearly 20% of its value against key currencies.

The dollar fell 1% in U.S. trading Monday, according to an index maintained by the Federal Reserve Board. The index measures the dollar against the currencies of 10 other countries, weighted on the basis of trade.

Interest Rates ‘a Bit Softer’

“People are looking at the economy slowing down and interest rates continuing a bit softer,” said James T. McGroarty, vice president at Discount Corp. in New York.

Lower interest rates would reduce yields available on investments denominated in dollars, making the currency less attractive to foreign investors.

Traders were also awaiting several new reports on the U.S. economy due later in the week, McGroarty said. The government is to release figures on March industrial production today and on the first-quarter growth in the gross national product on Thursday.

If those reports indicate weakness in the economy, McGroarty said the dollar could continue to tumble as the perception grows that interest rates may be headed lower.

In addition to worries about the pace of economic growth, McGroarty said recent disclosures about thrift institutions that have run into trouble because of their dealings with failed securities dealers have frightened some foreign investors away from the dollar.

In Tokyo, where trading ends before Europe’s business day begins, the dollar rose to 251.85 Japanese yen from 251.00 yen Friday. In U.S. trading, the dollar fell, however, to 250.475 yen from 251.20 yen Friday.

Pound Up Again

The British pound was one of the main beneficiaries of the dollar’s decline, rising more than 2.7 cents in London to its highest level since last Sept. 12. It cost $1.27825 to buy one pound, compared to $1.2510 last Friday. In the United States, the pound rose to $1.2710 from $1.25375 late Friday.

Dollar rates as of 4 p.m. EST in New York, compared to late rates Friday, included: 3.0340 West German marks, down from 3.0615; 2.54175 Swiss francs, down from 2.5725; 9.2550 French francs, down from 9.3500, and 1.3619 Canadian dollars, down from 1.3640.

In London, gold rose to $332.70 an ounce from $329.50 late Friday. On the Commodity Exchange in New York, gold for current delivery rose $1.70 to $329.70 an ounce.

Silver for current delivery fell 6 cents on the Comex to $6.584 an ounce.