Dollar closes mixed, but could be ready for rally

November 04, 1992|By Bloomberg Business News

NEW YORK -- The dollar closed mixed yesterday, though it could be poised to rise today after the outcome of the U.S. presidential election is known.

The dollar finished at 122.45 Japanese yen, down from 123.75 yen, and at 1.5670 marks, up from 1.5660 marks.

Investors have been bidding the dollar higher for weeks on the conviction that Democrat Bill Clinton will win the election. The idea that Mr. Clinton would widen the federal deficit, pushing interest rates higher in the process, has supported the dollar.

Now many investors are finding other reasons for optimism about the currency, traders said.

"The thinking is that the U.S. economy is in better shape, and it's inevitable that the Europeans will lower their rates," said John Duffy, a trader at Bayerische Vereinsbank AG.

The dollar could rise to about 1.80 marks next year because of narrowing interest rate differentials between the United States and Germany, a strengthening U.S. economy and an improvement in the U.S. balance of payments, said John Rothfield, a currency analyst at First Chicago.

While that may turn out to be the case, yesterday's economic data didn't paint a bright picture in the next few months.

News that the index of leading indicators fell 0.3 percent in September, after a 0.3 percent decline in August, depressed the dollar early in the session, traders said.

The dollar was also hurt by rumors that a senior Clinton adviser, said to be Roger Altman, had advocated an exchange rate of 100 yen, traders said. Mr. Altman, who is said to be a candidate for Treasury secretary in a Clinton administration, later denied the reports, but the dollar didn't recover.

In other trading today, the British pound closed at $1.5520, compared with $1.5343. The Swiss franc closed at 1.3990 to the dollar, up slightly from 1.3967.

The French franc closed at 5.2920 to the dollar, stronger than 5.3190 to the dollar yesterday. The dollar fetched 1334 Italian lire, down from 1345 lire, and 1.2434 Canadian dollars, little changed.

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