Foreign Exchange : Dollar Drops Sharply in U.S. Trading

Associated Press

The dollar fell sharply in U.S. trading Thursday, undermined by persistent speculation that the Federal Reserve Board planned to cut its discount rate. Gold ended down.

The dollar had gained ground in Europe on doubts that the central bank would indeed lower the 7.5% rate it charges on loans to commercial banks.

Gold prices also seesawed, but in a narrow range. Bullion was quoted at $339 an ounce at Republic National Bank at 4 p.m. EST, down 75 cents from Wednesday’s bid. In addition to citing discount cut rumors, Jack Barbanel, director of futures trading at Gruntal & Co., said, “Most of the trade is beginning to dismiss the political comment and undertones and looking back at the fundamental of the markets.”

In recent weeks, the dollar has risen and fallen on comments by U.S. and foreign officials about whether or not they are satisfied with the currency’s level.

Barbanel, citing a slower economy and lower interest rates, said, “The dollar is probably going to continue to weaken.”