CURRENCY : Dollar Gains on Interest Rate Speculation, Year-End Demand
The dollar rose sharply against most key foreign currencies in thin worldwide trading Wednesday, partly due to year-end demand and speculation of higher U.S. interest rates.
Gold prices retreated. Republic National Bank of New York said gold bullion was bid at $413.50 an ounce as of 4 p.m. EST, down $4 from late Tuesday.
Foreign exchange dealers said the dollar’s advance came largely from corporate orders for the currency and speculative buying in Tokyo. The prospects for higher interest rates in the United States also helped, they said.
But since trading remained extremely quiet, with many dealers on holiday until after New Year’s Day, any movement might have been exaggerated, dealers said.
“I call this a technical rally in a very thin market,” said Earl I. Johnson, a dealer with Harris Trust & Co. in Chicago.
In Tokyo, where trading ends before Europe’s business day begins, the dollar rose 0.47 yen to 125.27 yen. The dollar was quoted at 125.80 yen in London. Later in New York it stood at 125.68 yen, up from 124.935 late Tuesday.
In London, one British pound cost $1.7900, compared to $1.8030 in Europe late Tuesday. Wednesday was the first post-Christmas trading day in London, although markets on the European continent reopened Tuesday.
Sterling fetched $1.7885 in New York, down from $1.8023.
Other late dollar rates in New York, compared to Tuesday’s rates, included: 1.7905 West German marks, up from 1.7775; 1.5135 Swiss francs, up from 1.4990; 1.19285 Canadian dollars, down from 1.19725; 6.1115 French francs, up from 6.07125, and 1,317.75 Italian lire, up from 1,309.25.
Late dollar rates in London, compared to Tuesday: 1.7960 West German marks, up from 1.7760; 1.5177 Swiss francs, up from 1.49875; 6.1225 French francs, up from 6.0675; 2.0255 Dutch guilders, up from 2.0050; 1.1963 Canadian dollars, down from 1.19575, and 1,320.90 Italian lire, up from 1,308.10.
On the Commodity Exchange in New York, gold for current delivery closed at $413.90 an ounce, down from $418 late Tuesday.
Gold was trading in London at a late bid price of $413.95 an ounce, down from $417.75 an ounce Friday, the last day of trading before the extended Christmas holiday. In Zurich, Switzerland, the late bid price was $412.25, down from $418.50 bid late Tuesday.
Earlier, in Hong Kong, gold closed at a bid price of $417.45 an ounce, down $1.45 from Saturday.
Silver prices declined. On New York’s Comex, silver closed at $6.088 an ounce, down from $6.180 Tuesday.
Silver was quoted in London late Wednesday at a bid price of $6.07 an ounce, down from $6.12 Friday.
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