Foreign Exchange for Thursday, Aug. 14, 1986 : Dollar Edges Down; Gold Is Mixed

The dollar edged down against major foreign currencies in quiet trading Thursday amid uncertainty about whether the Federal Reserve would cut its discount rate, and if so, when.

Gold prices were mixed. Bullion was quoted at $386.50 an ounce at 4 p.m. EDT at Republic National Bank in New York, up $2.25 from Wednesday’s late bid.

Currency dealers said the dollar fluctuated within a narrow range throughout the thin day.

“There is some caution as to whether we’re going to get a discount rate cut, and, if we do, how we’ll respond to it,” said Daniel Holland, assistant vice president with Discount Corp.

The discount rate, now at 6%, is the interest charged by the Fed on loans to financial institutions.

Speculation that the discount rate would be cut was heightened by a decline Wednesday in the short-term U.S. federal funds rate, which slipped below 6%, traders said.

Holland said dealers were also feeling cautious ahead of economic reports to be released today.