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CURRENCY : Sterling’s Decline Helps Halt Dollar’s Slide

Associated Press

The dollar finished mixed in an active session Tuesday, but traders attributed the currency’s spotty gains to technical factors rather than fundamental strength.

Gold prices were mixed. Republic National Bank’s late quote was $397.60 an ounce, up from $396.95 late Monday.

Traders said the market was inclined to sell dollars, but a drop in the British pound prevented the U.S. currency from falling across the board. The dollar posted its best gains on the day against the pound and the West German mark.

The British government’s decision to order the Kuwaiti Investment Office to sharply reduce its holding in British Petroleum Co. sparked speculation that Kuwait might sell significant amounts of sterling. Those fears worked to weaken the pound and firm the dollar.

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Separately, the dollar initially seesawed on rumors swirling around Saudi Arabia’s status within the Organization of Petroleum Exporting Countries. Saudi Arabia has threatened to flood world markets with its crude oil to punish other oil-producing nations that have ignored quotas by the cartel.

Bob Morrissey, a senior trader at Bank of Boston in New York, said there also was talk that Saudi Arabia “might be dropping out of OPEC. But when those rumors were denied, it brought the dollar back up.”

Gains Against Pound

In Tokyo, where trading ends before Europe’s business day begins, the dollar fell 0.75 Japanese yen to a closing 133.15 yen from Monday’s 133.90. Later, in London, it was quoted at a higher rate of 133.20 yen. In New York, the dollar closed at 133.31 yen, down from 133.68 yen.

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In London, the dollar gained against the British pound. It cost $1.6945 to buy one pound, cheaper than $1.6990 late Monday. In New York, it cost $1.6952 to buy one pound, less expensive than Monday’s $1.7019.

Other late dollar rates in New York, compared to late Monday, included: 1.8646 West German marks, up from 1.8617; 1.5827 Swiss francs, up from 1.5820; 6.3460 French francs, up from 6.3420; 1,389.50 Italian lire, up from 1,387.00, and 1.2082 Canadian dollars, down from 1.2097.

Gold Prices Mixed

Other late dollar rates in Europe, compared to late Monday, included: 1.8610 West German marks, up from 1.8608; 1.5775 Swiss francs, down from 1.5785; 6.3285 French francs, down from 6.3350; 2.0950 Dutch guilders, down from 2.1010; 1,385.875 Italian lire, down from 1,397.95, and 1.20965 Canadian dollars, down from 1.2104.

Gold prices on the New York Commodity Exchange rose to $398.10 from Monday’s $397.50.

But in London, the metal fell to a late bid of $397.45, compared to late Monday’s $397.75. The metal also moved lower in Zurich, where gold closed at a bid of $396.90, compared to $397 late Monday. Earlier in Hong Kong, gold rose $4.32 to close at $402.23.

Silver prices were unchanged on New York’s Comex, closing at $6.248 an ounce. Silver prices rose in London to a late bid of $6.23, compared to Monday’s $6.22.


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