Newspaper article THE JOURNAL RECORD

Dollar Falls, Gold Mixed

Newspaper article THE JOURNAL RECORD

Dollar Falls, Gold Mixed

Article excerpt

NEW YORK (AP) - The dollar fell against all major foreign currencies except the British pound and Japanese yen on Wednesday, fluctuating in volatile trading on conflicting remarks by Federal ReserveBoard Chairman Paul Volcker and other top Reagan administration officials over U.S. monetary policy.

The price of gold was mixed.

The dollar slid to four-year lows against some currencies in Europe on Volcker's remarks to the House Banking Committee that lower U.S. budget deficits would help reduce interest rates, and on Treasury Secretary James Baker's comments that the Reagan administration agreed with the Fed's ""desire for lower interest rates.''

Lower interest rates make dollar-denominated investments less attractive.

In addition, U.S. Trade Representative Clayton Yeutter was quoted as saying the dollar needed to weaken further in order to help trim the U.S. trade deficit.

A weaker dollar makes imported goods more expensive in the United States, and traders in Europe said the remarks by the administration officials sparked dollar selling on the belief the Fed would ease credit conditions to further weaken the dollar.

But the dollar recouped some of its losses later in U.S. trading, rising when it was reported Volcker also told the banking committee that the Fed had not made any recent significant change in its monetary policy, an indication to some traders that the Fed would not act to lower interest rates in the near future.

The Fed chairman also warned that the dollar's rapid drop could rekindle high U.S. inflation.

""The whole day's trading was all based on remarks, first Baker talking the dollar down, then Volcker talking the dollar up,'' said Gordon Beals, a foreign currency trader for Prudential-Bache Securities Inc. in New York. ""But there's no hard news.''

Mark Fitzsimmons, a vice president and currency trader for Chemical New York Capital Markets Group, said the conflicting statements mirrored the belief of many traders that the dollar still had room to fall. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.