CURRENCY : Dollar Climbs as Traders Wait for Interest Rate Rise
The dollar rose against major foreign currencies Friday as traders decided that U.S. interest rates were likely to rise.
Gold prices fell in thin trading. Republic National Bank said gold bullion was bid at $451 an ounce as of 4 p.m. EDT, down from $453.10 late Thursday.
Foreign exchange dealers said the dollar was first helped by strong Japanese buying. It gained further when it went above 1.71 West German marks, a level that had been seen as the upper limit of its present exchange rate.
Although the Federal Reserve did not raise the discount rate Friday, as some traders had expected, many continued to believe that the Fed has tightened credit enough so that U.S. banks will be prompted to raise their prime rates another notch next week, said Jack Adkins, a currency analyst for Refco Group in Chicago.
Expectations of higher U.S. interest rates tend to boost the dollar by making dollar-denominated investments more attractive.
In London, the British pound traded late in the day at $1.8570, down from $1.8625 late Thursday. Later in New York, sterling fell to $1.8574 from $1.8611.
The dollar closed at 124.64 Japanese yen in Tokyo, up from 124.50 late Thursday. In later London trading, the dollar was quoted at 124.82 yen. At the end of the trading day in New York, the dollar rose to 124.93 yen from 124.58.
Other late dollar rates in New York, compared to late Friday’s rates, included: 1.7178 West German marks, up from 1.7086; 1.4358 Swiss francs, up from 1.4233; 1.2392 Canadian dollars, up from 1.2364; 5.7770 French francs, up from 5.7565, and 1,273.13 Italian lire, up from 1,267.75.
Other late dollar rates in Europe, compared to late Thursday’s rates, included: 1.7140 West German marks, up from 1.7080; 1.4305 Swiss francs, up from 1.4257; 5.7660 French francs, up from 5.7620; 1.9177 Dutch guilders, up from 1.9125; 1,270.75 Italian lire, up from 1,268.00, and 1.2407 Canadian dollars, up from 1.2374.
In Hong Kong, gold closed at a bid $454.12 an ounce, up from $452.42.
The late bid for gold bullion in London was $452, down from $453.30. In Zurich, Switzerland, gold was bid at $452.50, down from $454.
On the Commodity Exchange in New York, gold bullion for current delivery was bid at $450.80, down from $454.10.
Silver bullion traded late in London at a bid $6.59 an ounce, down from $6.63. On New York’s Comex, silver bullion for current delivery fell to $6.530 from $6.610.
