CURRENCY : Dollar Higher Against Most Currencies

News of a sharply improved U.S. trade performance in March drove the dollar higher against most major currencies Tuesday, but traders said the report failed to reverse the dollar’s downward trend.

Gold prices were mostly lower. Republic National Bank of New York quoted a bid price for gold bullion of $453.75 an ounce at 4 p.m. EDT, down from $455 late Monday.

The Commerce Department reported the trade deficit shrank more than $4 billion in March to $9.7 billion, the lowest monthly shortfall since March, 1985. U.S. producers sold a record amount of goods overseas in March, slicing by 29.5% the February deficit of $13.83 billion.

Most foreign exchange dealers expected a March shortfall of about $12.5 billion.

“The initial reaction was quite a bit of surprise,” said Ron Sapiro, head currency trader at Continental Illinois National Bank & Trust Co. in Chicago.

Market players swooped to buy dollars in an initial frenetic wave after the trade report was released, but activity soon settled down.

The narrowing of the trade deficit was good news for the dollar, since the currency’s long-term decline has apparently paid off by making U.S. exports more attractive, and monetary authorities likely will not seek to lower its value further.

However, traders emphasized that the overall trend for the dollar remains lower.

“I don’t see a complete turnaround in the dollar’s fortunes, by any means,” said Fred Barth, the chief foreign exchange trader for Prudential-Bache Securities Inc. in New York.

Pound Falls

In Tokyo, the dollar closed at 124.82 yen, up from 124.73 yen late Monday. Later in London, after the release of the trade figures, it was quoted at 125.70 yen. At the end of the trading day in New York, the dollar settled at about 125.75 yen, up from 124.92 yen late Monday.

In London, it cost $1.8630 to buy one pound, far cheaper than $1.8915 late Monday. The pound fell in New York to $1.8603 from $1.8890 late Monday.

The pound was hit by a half-percentage point cut Tuesday in Britain’s leading interest rate.

Other late dollar rates in New York, compared to late Monday’s prices, included: 1.7065 West German marks, up from 1.6862; 1.4233 Swiss francs, up from 1.4049; 5.7795 French francs, up from 5.7275; 1,267.00 Italian lire, up from 1,255.50, and 1.2370 Canadian dollars, up from 1.2337.

Other late dollar rates in Europe, compared to late Monday’s rates, included: 1.7045 West German marks, up from 1.6860; 1.4190 Swiss francs, up from 1.4013; 5.7710 French francs, up from 5.7170; 1.9060 Dutch guilders, up from 1.8890; 1,264.00 Italian lire, up from 1,253.45, and 1.2358 Canadian dollars, up from 1.2322.

Gold bullion fell in London to a late bid of $453.50 an ounce, compared to late Monday’s bid of $455.

In Zurich, Switzerland, gold was higher, closing at a bid of $455, compared to $454 late Monday.

Earlier, in Hong Kong, gold fell 57 cents to close at a bid $454.67.

On the Commodity Exchange in New York, gold for current delivery rose to $455.50 an ounce from $454.90 late Monday.

Silver bullion prices fell on the London market, where the metal traded at a late bid price of $6.59 an ounce, compared to Monday’s $6.70.

On New York’s Comex, silver for current delivery fell to $6.540 an ounce from $6.583 late Monday.

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