News of U.S. Clash With Libyan Jets Strengthens Dollar

The U.S. dollar gained strongly against the major currencies in European trading today, supported by military events involving the United States and Libya.

Foreign exchange dealers said the dollar rose on news that U.S. fighter planes shot down two Libyan fighters over the Mediterranean. They said the American currency is regarded as a safe haven in times of international tension.

Before European markets opened, the dollar fell in Tokyo against the Japanese yen on the first day of trading there after the New Year holiday. Dealers in Tokyo said there was massive selling of dollars after excessive buying at the end of 1988.

The dollar closed in Tokyo at 124.05 Japanese yen, down from Friday’s 125.90 yen before the holiday. In London late today, the dollar traded higher at 124.95 yen.

Gold bullion prices fell as the dollar rose but recovered some ground on news of the shooting down of two Libyan jet fighters.

Gold closed in London, the major market, at a bid $409.75 a troy ounce, down from $411.75.