Dollar Up Despite Discount Rate Cut

The dollar rose against most of the world’s major currencies Friday despite reductions in U.S. interest rates.

Gold fell in the United States after posting modest gains overseas. Republic National Bank in New York quoted gold at $346.25 an ounce as of 4 p.m., or $1 lower than Thursday’s late bid.

The dollar was bid higher amid buying by dealers who had previously sold dollars based on expectations that the U.S. currency would slide after the Federal Reserve Board reduced its chief loan fee, analysts said.

The U.S. central bank’s half-point cut in the discount rate to 6%, announced Thursday and effective Friday, spawned a series of interest rate reductions by commercial banks across the country. Most major U.S. banks trimmed their prime, or base, lending rates to 8% from 8 1/2%.

But the Fed’s move, and the reaction by commercial banks, had been so widely anticipated that there was little impact on currency exchange rates, analysts said.