The US$ eased in light trading yesterday as hopes dimmed that the Group of Seven leading industrial nations would come up with a plan to aid the battered U.S. currency.
The annual G-7 summit opens today and several key officials have said the issue of currency fluctuations is not on the formal agenda - despite the US$'s drop to a 14-month low against the mark Wednesday and its fall to consecutive post-Second World War lows against the yen.
"The G-7 countries are recognizing they can't do anything right now," said Al Soria, foreign exchange manager at Kansallis Osake Pankki.
"They don't really have many weapons in their arsenal," he said.
Still, many dealers believe that if the G-7 does nothing the US$ could fall even further, possibly destablizing the stock and bond markets as well.
Measures to help the currency might include concerted intervention - such as took place twice earlier this year when the Federal Reserve and 16 other central banks were believed to have bought billions of US$s.
A co-ordination of monetary policy, which might involve higher U.S. interest rates and lower Japanese and European interest rates, is another option.
However, analysts said, it may be difficult for the G-7 to agree on any of those actions, and there is no guarantee they would succeed.
Although traders were generally negative about the US$, they stopped short of selling it heavily ahead of today's key June U.S. employment report. Regardless of any agreements on monetary policy, a report suggesting strong jobs growth and possible inflationary pressure could prompt the Federal Reserve to raise interest rates, thus helping the US$.
Late in New York, the US$ was quoted at 1.5722 marks, down from 1.5750 Wednesday. Earlier in London, the US$ closed at 1.5735 marks, up from 1.5695 marks Wednesday.
The US$ was quoted at 98.75 yen, down from 98.85 yen late Wednesday. Earlier in Tokyo, the US$ closed at 99.05 yen, up from late Wednesday's 98.30 yen.
The British pound slid in New York to US$1.5385 from US$1.5463 late Tuesday.
Other late US$ rates compared with late quotes Wednesday included: 1.3245 Swiss francs, down from 1.3255; 5.4025 French francs, down from 5.4100; and 1,566 Italian lire, up from 1,565.
Gold prices rose US$1.10 an ounce on the New York Commodity Exchange, where the most-active August contract closed at US$385.70 an ounce. A late quote from Republic National Bank put spot gold at US$384.95 an ounce.
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