Foreign Exchange for Monday, Dec. 1, 1986 : Dollar Rebounds in U.S. Trading

The dollar tumbled Monday in Europe because of concern that the U.S.-Iran arms crisis could cripple the Reagan Administration, but the currency rebounded later in U.S. trading and ended the day mixed.

Analysts said the dollar’s partial recovery reflected positive statistics on October construction spending released, a mild rise in interest rates and a belief among many American foreign exchange traders that the Iran crisis has little relevance to the U.S. currency’s value. Early gold prices rose nearly $10 in Europe but the gains receded later, mostly in reaction to the dollar’s recovery. Republic National Bank in New York quoted gold at $393.75 an ounce, up $3.25 from Friday. The dollar slipped to six-year lows against the West German mark and Dutch guilder and four-year lows against the French franc and Italian lira in European markets. Traders called the tumble a direct response to the political crisis in Washington over U.S. arms shipments to Iran and diversion of profits to Nicaraguan rebels.