CURRENCY : Rally in Securities Markets, Short-Covering Boost Dollar

The dollar rose against all the major currencies Tuesday as stocks and Treasury bonds surged higher.

Gold prices edged lower. Republic National Bank of New York quoted a late bid of $426.75 an ounce, down from $428.05 Monday.

Analysts said there was no news to affect dollar trading, but the U.S. currency moved higher on short-covering, transactions in which traders buy dollars to fulfill earlier agreements to sell them.

Soaring stock and bond prices also lifted the dollar higher, said Ronald Holzer, chief trader with Harris Trust & Co. in Chicago.

“There’s a general movement into U.S. assets today,” Holzer said.

On Wall Street, the Dow Jones industrial index rose 25.60 to 2,149.36, while the Treasury’s bellwether 30-year bond climbed more than $24 per $1,000 in face value by late afternoon.

In overseas trading, dealers also attributed the dollar’s advance to short-covering. They said foreign exchange markets were already waiting for the Dec. 14 release of U.S. trade figures for October.

In London, one British pound cost $1.8675 late Tuesday, cheaper than Monday’s late $1.8690. In later New York trading, the pound slipped to $1.86025 from $1.8683.

Other late dollar rates in New York, compared to late Monday’s prices, included: 1.7376 West German marks, up from 1.72605; 1.45755 Swiss francs, up from 1.44425; 5.9130 French francs, up from 5.8875; 1,282.50 Italian lire, up from 1,275.45, and 1.19135 Canadian dollars, up from 1.18675.

Other late dollar rates in Europe, compared to late Monday’s rates, included: 1.7290 West German marks, up from 1.7225; 1.4480 Swiss francs, up from 1.4420; 5.9015 French francs, up from 5.8800; 1.9470 Dutch guilders, up from 1.9425; 1,277.12 Italian lire, up from 1,273.50, and 1.1887 Canadian dollars, up from 1.1851.

In Tokyo, the dollar closed at 121.54 Japanese yen, up from 121.53. In London, the dollar traded slightly higher at 121.55 yen, and in New York, the dollar rose to 121.915 yen from late Monday’s 121.565.

Gold closed in London, the major European trading center, at $427.25 an ounce, down from $428.75. The Zurich, Switzerland, closing price was $427.75, down from $429.

Earlier, gold closed in Hong Kong at $429.73, down from $429.94. On the Commodity Exchange in New York, gold fell to $427.50 from $429.30.

Silver bullion traded late in London at $6.12 an ounce, down from $6.14. On the Commodity Exchange, silver edged down to $6.161 from $6.163.