Foreign Exchange for Wednesday, Dec. 18, 1985 : Dollar Gains on a Broad Front

Indications that the Japanese yen may be stabilizing against the dollar helped propel the U.S. currency broadly higher Wednesday.

Gold bullion, which fell in Hong Kong and Europe, later rose in the United States. Gary Dorsch, a currency analyst at G. H. Miller & Co., a Chicago commodities firm, said the course of the yen, U.S. interest rates and the price of oil all affected currency markets Wednesday.

“The focal point of tension was the Japanese yen,” he said. “A story from Japan quoted the governor of the Bank of Japan as saying he thought the yen had reached an appropriate level against the dollar. That was interpreted to mean that the Bank of Japan was content with an an exchange of 200-205 yen. With the dollar trading at the lower end of that range at the time, traders came in and bought dollars.”

In addition, Dorsch said, another report said Japanese Prime Minister Yasuhiro Nakasone had publically called for cuts in Japanese interest rates.