Deutschemark Remains Strong and German Stock Index Rises

The deutschemark remained strong Monday in closely watched trading sessions that followed the powerful currency’s introduction into East Germany.

Currency dealers said the mark also was strengthened by the possibility of U.S. tax increases to combat an American deficit.

The mark was fixed at 1.6538 to the dollar in Frankfurt, up from 1.6715 marks on Friday. In London, the mark was pegged at 1.6535 to the dollar, up from 1.6635 marks on Friday.

The stock market in Frankfurt on Monday also reacted favorably to the first business day of economic union: The German stock index climbed to 1,912.58 from 1,879.90 on Friday.

Dealers remained optimistic that the West German stock market could be set for a continued rising trend if the economic union progresses smoothly enough to keep the inflation rate down.

Although markets were steady to improved, one dealer cautioned that warning strikes at some East German factories on Monday could be troubling to currency and stock markets.

West Germany sent 25 billion marks ($15.1 billion) from its national bank’s cash reserves of new bills to cover the initial phase of economic unification. No new money had to be printed to cover the project.