CURRENCY : Dollar Edges Lower in Wake of Deficit Plan

Associated Press

The dollar slipped against most major currencies Monday as foreign exchange traders showed little enthusiasm for the agreement last Friday to trim the U.S. budget deficit.

Gold prices rose. Republic National Bank of New York quoted a bid of $474.70 for an ounce of gold at 4 p.m. EST, up from $469.50 late Friday.

Analysts said foreign exchange trading was depressed by disappointment over the results of the Washington budget talks, which consumed the market's attention last week and caused wild gyrations in dollar trading Friday as traders awaited a final announcement.

"The markets were not overly impressed (by the agreement)," said Fred Barth, chief currency trader for Prudential-Bache Securities. "It seems to be more cosmetic than anything else."

In the wake of the compromise, analysts said that there were lingering doubts about lawmakers' ability to live up to their promise to pare $76 billion from the budget deficit over two years.

Light Trading

Congress is expected to act on the agreement by next month, but foreign exchange dealers said there was no guarantee Congress would approve the deal. They said Republicans would object to the tax increases in the agreement and Democrats would see it as a trifling package that should be voted down.

As a result, many analysts said that they expected dollar trading to remain light, especially in domestic trading where activity could be subdued by the upcoming Thanksgiving holiday.

The dollar traded at 134.70 Japanese yen late Monday in London, while the Tokyo markets were closed for a national holiday. In New York, the dollar bought 134.725 yen, down from 135.60 late Friday.

In London, one British pound cost $1.7865 late Monday, up from Friday's late $1.7780. Later in New York, the pound was bid at $1.7845, up from $1.7760 late Friday.

Other selected late dollar rates in New York, compared to late Friday's rates, included: 1.6740 West German marks, down from 1.68075; 1.3730 Swiss francs, down from 1.3800; 5.6825 French francs, down from 5.6970; 1,232.75 Italian lire, down from 1,235.50, and 1.31145 Canadian dollars, up from 1.31115.

Late European rates Monday compared to Friday's late rates included: 1.6690 West German marks, down from 1.6820; 1.3707 Swiss francs, down from 1.3805; 5.6737 French francs, down from 5.7065; 1.8800 Dutch guilders, down from 1.8935; 1,228.00 Italian lire, down from 1,236.75, and 1.3110 Canadian dollars, down from 1.3135.

Gold was bid in London at $472.00, up from $463.80 late Friday, and at $469.00 dollars in Zurich, up from $465.00.

Earlier in Hong Kong, gold closed at a bid $468.35, up from $466.23 late Friday.

Gold for current delivery closed on the New York Commodity Exchange trading at $475.40 an ounce, up from $469.60 late Friday.

Silver bullion traded late in London at a bid $6.65 an ounce, up from $6.53. At the New York Comex, silver for current delivery fetched $6.942 an ounce, up from $6.658 late Friday.

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