Magazine article American Banker

Dollar Falls after 5 Nations Adopt a Plan for Concerted Intervention

Magazine article American Banker

Dollar Falls after 5 Nations Adopt a Plan for Concerted Intervention

Article excerpt

LONDON -- A slide in the dollar gathered momentum on European exchanges Monday on the prospect of concerted intervention by the central banks of five leading industrial nations -- the United States, Japan, Germany, France, and Britain.

Dealers here said there was no evidence of actual central bank intervention on any significant scale and that most of Monday's dollar depreciation reflected selling by speculators in response to the decision of the industrial nations to force down the U.S. currency.

The dollar fell throughout the morning and early afternoon, trading at about 7% below last Thursday's levels against the British pound, the West German mark, and the Swiss franc and about 5% below Thursday's levels against the Japanese yen and French franc.

Dealers said there was no consensus on whether the dollar's plunge was short-term, or the beginning of a real decline.

The fall in the dollar exchange rate was accompanied by a rise in the dollar price for gold from $316.50 last Thursday and $319.50 Friday to $326 a troy ounce at the close Monday -- although in most currencies other than the dollar, this left bullion selling at below the prices at which it was trading towards the end of last week.

The downward move of the dollar actually began last Friday following the U.S. Commerce Department's flash estimate that America's third quarter gross national product growth will be at an annual rate of 2.8%. The estimate is regarded here as probably too optimistic, despite the fact that it portends a considerably slower expansion of the U. …

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