CURRENCY : Uncertainty Over Japan Rattles Dollar
The dollar turned mixed in domestic dealings Friday after rising overseas, as uneasiness set in over the upcoming close of Japan’s fiscal year and the long-term prospects for the U.S. economy.
Gold prices were mostly higher. Republic National Bank of New York said gold was bid at $444 an ounce as of 4 p.m. EST, up from $443.40 an ounce late Thursday.
Analysts said the dollar had a slightly firmer tone and continued to draw support from better-than-expected trade figures released Thursday.
“But there’s fear that we’ll see trade numbers in the future that are not that good,” said Earl I. Johnson, a vice president at Harris Trust & Savings Bank in Chicago.
“There’s still a lot of uncertainty about the economy,” he said.
Analysts said there also is concern about what effect the end of Japan’s fiscal year will have on the U.S. currency.
Some speculate that Japanese dealers will keep the dollar steady through the year’s March 31 close so they will not have to write down losses on their portfolios. “But there’s a fear they might dump dollars” after that, Johnson said.
In addition, “there is a growing fear that because the Japanese economy is so strong, the Bank of Japan might tighten monetary policy,” thereby hiking interest rates, said James O’Neill, vice president and financial markets economist at Marine Midland Bank.
Under that scenario, the dollar would fall as Japanese-U.S. interest rate differentials narrowed, he said.
In Tokyo, the dollar closed at 128.35 Japanese yen, up from 127.43 yen Thursday. In later London trading, the dollar was holding steady at 128.35 yen. In New York, the dollar fell to 128.00 yen from 128.75 yen on Thursday.
In London, the British pound fell to $1.8235 from $1.8385 late Thursday. In New York trading, it cost $1.8240 to buy one pound, less expensive than Thursday’s $1.8330.
Other late dollar rates in New York, compared to late Thursday, included: 1.69575 West German marks, up from 1.69165; 1.4040 Swiss francs, down from 1.4045; 5.7590 French francs, up from 5.7455; 1,255.50 Italian lire, up from 1.252.50, and 1.24885 Canadian dollars, down from 1.24925.
Other late dollar rates in Europe, compared to late Thursday, included: 1.6950 West German marks, up from 1.6775; 1.4010 Swiss francs, up from 1.3940; 5.7480 French francs, up from 5.7175; 1.9010 Dutch guilders, up from 1.8885; 1,252.50 Italian lire, up from 1,244.37, and 1.2495 Canadian dollars, up from 1.2493.
Gold bullion closed at $445.20 an ounce on the New York Commodity Exchange, up from $444.90 on Thursday.
In London, gold was quoted at a late bid price of $443.25 an ounce, up from $443 late Thursday. Gold was bid at $445 in Zurich, unchanged from late Thursday. Earlier, the metal closed in Hong Kong at a bid $446.39, down from $448.75.
Silver closed at $6.365 an ounce on New York’s Comex, up from $6.305 on Thursday. Earlier in London, silver bullion traded at a bid $6.31 an ounce, down from $6.34.
