NEW ORK -- The dollar rose Thursday, spurred by a strong showing in U.S. stocks and bonds and comments by Federal Reserve Chairman Alan Greenspan that the Asian currency crisis would have only a moderate effect on the United States.
The Dow Jones industrial average, which finally erased its new year's point-fall on Wednesday, furthered its return by another 50 points. Meanwhile, bond prices rose, sending their yields in the opposite direction.
Analysts said Greenspan's testimony before Congress played down the seriousness of the Asian crisis' effect on the United States -- especially in light of numerous earnings reports by major corporations blaming Asia for profit shortfalls. But traders considered it a tonic nonetheless.
The Mexican peso and the Canadian dollar also fell noticeably against the U.S. dollar, with the Canadian currency remaining in historically low territory.
"You have a strong stock market going on, you have a strong bond market going on, God bless America," was the sentiment at the various exchanges, said Ron Hudson, vice president of corporate sales at Royal Bank of Scotland in New York.
In New York trading late Thursday, the dollar was quoted at 125.67 yen, up from 124.75 Tuesday. The U.S. currency also settled at 1.8280 German marks, up from 1.8120.
The dollar's main play Thursday was against the mark, which rose against other European currencies but fell victim to perceptions it was just another ailing currency mired in the continent's economic malaise and problems preparing for the advent of the single European currency, Hudson said.
The dollar's strength against the Europeans spread to its dealings with the yen.
The dollar also was recovering from the instability stemming from allegations in the White House sex scandal. And the dollar was strengthened by talk of a military conflict with Iraq; the U.S. currency typically is a haven during contentious times abroad.
Greenspan, testifying before the Senate Budget Committee, said that the United States is just starting to feel the effects of the currency crisis from across the Pacific. He emphasized that, given the likelihood of an export slowdown and competition from imports, "economic activity in this country will moderate from the recent brisk pace."
That was interpreted to mean the Fed isn't planning to raise interest rates in the near future and may even lower rates this year. But it was the moderate tone that traders liked.
"He probably gave the market a little bit of breathing space with Asia. He calmed things down about the whole thing exploding," said Tim Hughes, vice president of foreign exchange marketing at First National Bank of Chicago. "The stock market has reacted pretty positively."
Other late dollar rates in New York, compared with late Wednesday: 1.4737 Swiss francs, up from 1.4636; 6.1252 French francs, up from 6.0680; 1.4500 Canadian dollars, unchanged; and 1,803 Italian lire, up from 1,787.75.
The British pound was quoted at $1.6396, down from $1.6415.
© 2017. All Rights Reserved. | Contact Us