CURRENCY : Pound Gains at Expense of Dollar

The rising British pound continued to take center stage in foreign exchange Wednesday at the expense of the dollar, which lost ground against most key currencies despite reports of central bank intervention.

Gold prices edged higher after falling overseas. Republic National Bank of New York said gold was bid at $456.25 an ounce as of 4 p.m. EST, up $1 from late Tuesday.

Currency traders said the dollar was hurt by sterling’s strength, although it managed to gain some ground in Europe. Trading was said to be generally quiet everywhere in anticipation of the coming Easter and Passover holidays.

British Chancellor of the Exchequer Nigel Lawson, speaking to a committee in Parliament, said Wednesday that the pound has moved higher recently only as a result of tight monetary policy, not because of an adjustment in any specific target by the government.

One trader at a major British bank said such comments represented “nothing new, but it is taken as a confirmation” that the British government was unlikely to tamper with the pound in its current, higher range and could allow it to appreciate further.

“Nigel Lawson implied . . . that the rise in sterling was something that was still in the spirit of the Louvre accord of currency stabilization,” said James T. McGroarty, a trader and vice president at Discount Corp.

“The traders took that to mean that the (central) bank had decided to let it go. I don’t buy that. I think there may be some action to slow the sterling’s rise.”

Still, many traders said that with Prime Minister Margaret Thatcher, Bank of England Governor Robin Leigh-Pemberton and Lawson backing a low inflation strategy and paying less attention to the pound, that currency could advance until the middle of next month.

In London, the British pound jumped to $1.8790 from $1.8705 on Tuesday. Sterling fetched $1.8780 in New York, up from 1.86425.

Earlier, in Tokyo, the dollar closed at 125.43 Japanese yen, up from 124.37, but it fell in London to 124.75 yen.

Traders said the Federal Reserve bought a small amount of dollars and sold yen late Wednesday in New York. The dollar closed at 125.025 yen, down from 125.255.

Other dollar rates late Wednesday in New York, compared to late Tuesday, included: 1.66285 West German marks, down from 1.66925; 1.37215 Swiss francs, down from 1.37675; 1.23575 Canadian dollars, down from 1.2360; 5.6330 French francs, down from 5.6505, and 1,232.175 Italian lire, down from 1,236.

Late rates in Europe compared to Tuesday’s late rates: 1.6625 West German marks, up from 1.6610; 1.3732 Swiss francs, down from 1.3735; 5.6505 French francs, up from 5.6280; 1.2370 Canadian dollars, up from 1.2363, and 1,235.50 Italian lire, up from 1,232.50.

On the Commodity Exchange in New York, gold bullion for current delivery was bid at $457.80 an ounce, up $2.40 from late Tuesday.

Gold closed in London at $453.60, down from $454.75. The late bid price in Zurich, Switzerland, was $454.50, down from $455. Earlier, in Hong Kong, gold closed at $455.79, down from $456.88.

On the New York Comex, silver bullion for current delivery was bid at $6.757 an ounce, up from $6.705 late Tuesday. Silver traded late in London at $6.65 an ounce, down from $6.69.