Newspaper article THE JOURNAL RECORD

Dollar Declines after Mixed Performance; Gold Up a Bit

Newspaper article THE JOURNAL RECORD

Dollar Declines after Mixed Performance; Gold Up a Bit

Article excerpt

NEW YORK (AP) - The dollar declined against other major currencies in U.S. trading Wednesday after a mixed performance overseas amid anxiety about Mexico's debt problems.

Gold prices declined in overseas markets before rising slightly in the United States. Metals traders said fears that South Africa's racial tensions might disrupt production in that country have abated.

At Republic National Bank in New York, gold bullion was quoted at $348 a troy ounce as of 4 p.m. EDT, up 50 cents from Tuesday's late bid.

Concerns that Mexico's debt problems could translate into trouble for the U.S. banking system undermined the dollar, dealers said.

""The Mexico situation is in the forefront of every traders' mind,'' said Chad Dickson, a vice president at Salomon Brothers Inc.

The Mexican peso strengthened a bit, following a strong rebound on Tuesday. At midday in Mexico City, commercial banks were offering 630 pesos for each dollar, up from 635 pesos per dollar a day earlier. The peso was trading at about 560 to the dollar a week ago.

Mexico is trying to reach new agreements with its creditors to keep from defaulting on all or part of its $98 billion foreign debt burden. The plunge in petroleum prices has sharply cut Mexico's export earnings and made it tougher for the country to meet repayments.

Meanwhile, currency dealers doubted the dollar would make a dramatic move ahead of U.S. government reports due Thursday and Friday on retail sales, industrial production and producer prices.

The data were expected to shed some light on economic conditions in May and indicate what direction U.S. interest rates might take in the weeks ahead. When U.S. interest rates fall, returns on dollar-denominated investments decline.

A rally in the credit markets, which caused interest rates to recede, also tended to depress the dollar on Wednesday, dealers said. …

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