Dollar Finishes Mixed Despite British Rate Cut, Bullish Comments

The dollar finished mixed Wednesday, bolstered somewhat by a cut in British interest rates and bullish comments from West German and U.S. officials.

Gold prices were also mixed. Republic National Bank in New York reported a late bid of $466.50, down from $467.50 Tuesday.

Analysts said the market remained intent on selling dollars even though several factors pushed the dollar higher.

The U.S. currency was boosted early in the session by comments by West German Finance Minister Gerhard Stoltenberg, who said that a further fall in the dollar would harm the leading industrial nations.

Stoltenberg was quoted in a German newspaper as saying “intensive and continuous contacts” with Treasury Secretary James A. Baker III and Federal Reserve Board Chairman Alan S. Greenspan show that “those responsible in Washington clearly want a stabilization of the dollar.”

The dollar also drew support from comments by Robert Ortner, U.S. undersecretary of commerce for economic affairs, who said the dollar had reached levels that were unacceptably low.

Skeptical of Rhetoric

Traders who had sold dollars in anticipation of further losses were forced to buy back dollars to cover their positions.

But Ronald Holzer, chief dealer at Harris Trust & Co. in Chicago, was skeptical of the rhetoric. “They have said so many things,” he said. “People are waiting to see if the central banks will make a hard attempt to support the dollar--all the action so far has been to smooth out its decline.”

In Britain, the Bank of England surprised the markets by trimming its key lending rate, and four major British banks cut their base lending rates half a percentage point to 9%.

The pound softened in response, which brought the dollar higher against other currencies, said Robert Ryan, senior trader at Irving Trust Co. “But after that, the market continued to sell dollars,” he said.

Looking to Administration

If West Germany’s central bank had cut its rates, “it would be a different story,” said Dan McMullen, an assistant vice president at the Union Bank of Switzerland in New York.

“That would bring the dollar up, but it would not send the dollar up far because once Germany reduces their rates, the United States won’t be far behind in cutting our (base) rates,” he said. Higher interest rates tend to support currencies.

Market participants continue to look to the Administration for positive action on the budget deficit. “They don’t seem to be getting it,” McMullen said. People believe that the dollar is heading lower, he added.

In Tokyo, the dollar lost further ground against the Japanese yen, closing at 137.25 yen, down from 137.58 Monday. Tokyo markets were closed for a national holiday Tuesday, when the yen plunged to a 40-year low of 136.40 yen in London.

The dollar was quoted at 137.15 yen in London. But in New York, the dollar closed at 136.70 yen, down from 137.50 yen Tuesday.

The British pound rose to $1.7480 from $1.7365 Tuesday. In New York, it cost $1.7540 to buy one pound, up from $1.7415.

Other late dollar rates in New York included: 1.7045 West German marks, down from 1.7173; 1.4050 Swiss francs, down from 1.4177; 5.7960 French francs, down from 5.8445; 1,260.00 Italian lire, down from 1,265.00, and 1.3253 Canadian dollars, up from 1.3228.

Other late dollar rates in Europe included: 1.7070 West German marks, down from 1.7135; 1.4110 Swiss francs, up from 1.4070; 5.8255 French francs, up from 5.8095; 1.9270 Dutch guilders, up from 1.9185; 1,264.50 Italian lire, up from 1,260.00, and 1.3233 Canadian dollars, up from 1.3220.

Gold closed at $466.20 on the New York Commodity Exchange, down from $468.40 on Tuesday. In London, gold bullion was bid at $466.50, up from $465.50 late Tuesday. In Zurich, gold also was quoted at a bid of $466.50, up from $464.50. Earlier, gold closed in Hong Kong at a bid of $469.59, down from $470.30.

Silver closed at $6.633 on New York’s Comex, down from $6.820 on Tuesday. In London, silver traded at a bid of $6.71, down from Tuesday’s $6.76.