Dollar Gains Abroad, Turns Mixed in U.S.

The dollar was mixed against other major currencies in U.S. trading Thursday after advancing in European markets.

Gold prices were narrowly mixed in worldwide activity. Republic National Bank in New York quoted gold at $316 an ounce, up 60 cents from Wednesday’s late bid.

Currency dealers said the dollar was bolstered in Europe after some U.S. economists predicted Wednesday that American interest rates--and hence yields on dollar-denominated investments--would rise later this year in tandem with an expanding U.S. economy.

The economy currently appears sluggish, according to government indicators, but some analysts said recent declines in interest rates are laying the groundwork for an economic upswing in the third and fourth quarters.

“Pessimism about the dollar seems to have vanished and appears to have been replaced by growing confidence in the strength of the U.S. economy,” one Frankfurt dealer said.

However, the dollar came under some pressure as trading moved to the United States when rumors erupted that Argentina was about to nationalize its banks, said James T. McGroarty, vice president of Discount Corp. in New York.

He said that the dollar quickly fell from about 3.08 West German marks to an intra-day low of 3.06 marks but that, after Argentina denied the rumors, the dollar rebounded to about 3.07 marks.

The dollar eventually finished at 3.0730 marks, still down from 3.0835 late Wednesday. Earlier in Frankfurt, the U.S. currency had risen to 3.08775 marks from 3.0700.

The rumors involving Argentina momentarily worried traders, McGroarty said, because “the exposure of U.S. banks to that center could be deemed a negative,” and that, if the American banks did encounter problems, the Federal Reserve might accommodate lower interest rates as part of an effort to ease the situation.

The dollar opened its trading day in Tokyo by rising to 251.40 Japanese yen from 250.55 yen late Wednesday. In London, the dollar was quoted at 251.55 yen, and, in U.S. trading, the dollar edged up to 251.30 yen from 251.20.

Also in London, the British pound fell for the fourth straight day, sliding to $1.25725 from $1.2655 late Wednesday. In U.S. dealings, however, sterling rose to $1.2680 from $1.2565.

Other late dollar rates in Europe, compared to Wednesday, were: 2.5980 Swiss francs, up from 2.5935; 9.4325 French francs, up from 9.4250; 3.4920 Dutch guilders, up from 3.4745; 1,973.00 Italian lire, up from 1,967.50, and 1.37275 Canadian dollars, up from 1.3700.

Other dollar rates in late U.S. trading, compared to Wednesday, were: 2.5800 Swiss francs, down from 2.5900; 9.3700 French francs, down from 9.4275, and 1.37275 Canadian dollars, up from 1.36115.