CURRENCY : Prime Rate Rise, OPEC Pact Help Dollar

The dollar advanced Monday in a rally that some traders attributed to an OPEC agreement on production cuts and an increase in the prime rate by major U.S. banks.

The Organization of Petroleum Exporting Countries agreed in Vienna to set a daily production quota of 18.5 million barrels and a target price of $18 a barrel. The announcement triggered a $1-a-barrel increase in oil prices.

The biggest U.S. banks raised their prime lending rates a half percentage point to 10.5%, the fourth increase this year.

Some analysts said the dollar’s rise was hard to explain because the prime rate increase had been widely expected and an increase in oil prices usually does not give a big boost to the dollar. But there were no other ready explanations for the dollar’s ascent.

“It’s a fairly impressive move by the dollar,” said Craig Sloane, a currency analyst for Smith Barney, Harris Upham & Co.

In London, the British pound fell to $1.8385 from $1.8435 late Friday. Later in New York, the pound fell to $1.8399 from $1.8424.

In Tokyo, the dollar closed at 122.00 Japanese yen, up from 121.15 late Friday. In London, the dollar traded at 122.15 yen. In New York, the dollar rose to 122.28 yen from 121.18 on Friday.

Gold Lower

Other late rates for the dollar in New York, compared to Friday’s late rates, included: 1.7355 West German marks, up from 1.7170; 1.4524 Swiss francs, up from 1.4378; 1.1931 Canadian dollars, up from 1.1903; 5.9273 French francs, up from 5.8705, and 1,286.25 Italian lire, up from 1,275.00.

Other late rates for the dollar in Europe, compared to Friday’s late rates, included: 1.7332 West German marks, up from 1.7154; 1.4515 Swiss francs, up from 1.4365; 5.9225 French francs, up from 5.8615; 1.9547 Dutch guilders, up from 1.9368; 1,285.50 Italian lire, up from 1,275.50, and 1.1918 Canadian dollars, unchanged from Friday.

In Hong Kong, gold closed at $422.02 an ounce bid, down from $424.98 in the previous session. Gold bullion closed in London at $423.85, down from $424 Friday. The late price in Zurich, Switzerland, was $423.25, down from $424.

On the Commodity Exchange in New York, gold bullion for current delivery closed at $423.30. The Comex was closed Thursday and Friday.

Republic National Bank of New York issued a late quote of $422.10 for gold bullion. There was no spot trading Thursday or Friday.

Silver bullion traded late in London at $6.16 an ounce, down from $6.18. On New York’s Comex, silver closed at $6.113.