CURRENCY : Dollar Advances Despite Intervention

The dollar rose broadly against major currencies Friday in anticipation of higher interest rates and continued strong economic growth and despite central bank intervention.

Gold prices also rose. Republic National Bank of New York quoted gold at a bid of $436 an ounce as of 4 p.m. EDT, up from $432.75 late Thursday.

Analysts said the dollar reached its highs for the week against some currencies, after falling in early trading as central banks intervened to suppress its rise.

“For awhile it was working. Then the Fed and other central banks stepped away for some reason and the dollar bounced right back up,” said Garrett Glass, vice president of First Capital Corp. of Chicago.

Dealers here and in Frankfurt said repeated dollar sales by the Federal Reserve and the central banks of West Germany, Switzerland, Italy and the Netherlands could not contain the U.S. currency’s strength.

Dollar buying has persisted in recent days on the assumption that interest rates are heading higher and that economic growth is continuing strong, analysts said.

Interest rates in the financial markets rose earlier this week on speculation that the Fed was moving to tighten credit to stem a rise in inflation. Higher interest rates increase the value of dollar-denominated investments.

Gains Against Yen

The dollar was bolstered because “all the signs point to a higher interest rate environment” in the United States, according to Marek Stefamovicz, a corporate adviser at Nomura Bank International.

In Tokyo, the dollar rose 0.43 Japanese yen to a closing 132.53 yen. Later, in London, it was quoted at 133.05 yen. In New York, the dollar rose to 133.145 yen from 132.55 yen late Thursday.

In London, the British pound was quoted at $1.7105, down from $1.7225 on Thursday. In New York, the pound fell to $1.7090 from late Thursday’s $1.7215.

Other late dollar rates in New York, compared to rates late Thursday, included: 1.87985 West German marks, up from 1.86615; 1.56325 Swiss francs, up from 1.5505; 6.3355 French francs, up from 6.2875; 1,384.50 Italian lire, up from 1,377.75; and 1.21055 Canadian dollars, up from 1.20785.

Other late dollar rates in Europe, compared to rates late Thursday, included: 1.8750 West German marks, up from 1.8645; 1.5615 Swiss francs, up from 1.5505; 6.3202 French francs, up from 6.2885; 2.1185 Dutch guilders, up from 2.0920; 1,377.75 Italian lire, up from 1,370.50, and 1.2105 Canadian dollars, up from 1.2086.

On the Commodity Exchange in New York, gold for August delivery closed at $436.10 an ounce, up from $432.50 late Thursday.

Gold rose in London to a late bid of $435.25 from $433. In Zurich, Switzerland, gold rose to $436.50 from $432.50.

Earlier, in Hong Kong, gold closed at a bid of $434.48, up from $433.78.

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