Dollar Falls Against Most Key Currencies; Gold Dips

The dollar slid in value against nearly all major currencies Wednesday, reflecting disappointment in a key government report on economic growth.

Gold prices also declined. At the Republic National Bank of New York, the late bid for gold was $467 an ounce, down $2.50 from Tuesday.

Currency dealers said the dollar at first rallied after the Commerce Department reported that the economy, as measured by the gross national product, expanded at a surprisingly brisk 4.2% annual rate in the fourth quarter.

On the surface the report looked good, but after close examination several flaws were revealed, dealers said.

For instance, the bulk of the $39.2-billion improvement in GNP fourth-quarter growth came from a sharp $33.7-billion rise in inventories held by businesses. The report also showed that consumer spending plummeted by $24.1 billion, translating to an annual percentage rate decrease of 3.8%.

Ronald Sapiro, head trader for Continental Illinois National Bank, said the markets used their disappointment in the report as an excuse to dump dollars.

Expects Intervention

“There haven’t been a lot of reasons to sell dollars lately,” due partly to fear of central bank intervention, he said.

Sapiro predicted that central banks would intervene should the dollar continue to fall overnight.

In Tokyo, where global trading begins, the dollar rose to 127.65 Japanese yen from Wednesday’s 127.55. But later in London the dollar fell to 127.53 yen, and in New York, it stood at 126.95 yen, down from 127.675 yen.

One British pound cost $1.7800 in London late Wednesday, much more expensive for buyers than the $1.7675 quoted late Tuesday. Sterling fetched $1.7830 in New York, up from $1.77425.

Other late dollar rates in New York, compared to late Tuesday, were 1.66625 West German marks, down from 1.67275; 1.35625 Swiss francs, down from 1.3570; 1.2781 Canadian dollars, down from 1.27895; 5.6170 French francs, down from 5.6430, and 1,228.75 Italian lire, down from 1,230.50.

Late rates in Europe, compared to Tuesday, included 1.6720 West German marks, down from 1.6775; 1.3588 Swiss francs, down from 1.3600; 5.6275 French francs, down from 5.6575; 1.8760 Dutch guilders, down from 1.8845; 1.2790 Canadian dollars, down from 1.2807, and 1,230.25 Italian lire, down from 1,233.25.

Gold Off by $2

At the New York Commodity Exchange, gold bullion for current delivery was quoted at $467.10 an ounce, down from $469.10 Tuesday.

Gold closed in London at a bid price of $465.75 an ounce, down from $469.50, and in Zurich at $465.50 an ounce, down from $470.

Earlier, in Hong Kong, gold closed at $472.79 an ounce, down from $473.86.

Silver prices were mixed. At the New York Comex, silver bullion for current delivery was quoted at $6.644 an ounce, up from $6.612.

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