Europe rushes to stave off crisis in currency markets

November 24, 1992|By New York Times News Service

LONDON -- Europe's monetary system looked more shaky than ever yesterday as governments and central banks battled to head off another full-fledged currency crisis.

Spain, Ireland and Norway all raised interest rates yesterday to bolster their currencies, and Denmark said it would raise rates if necessary. There was even some pressure on currencies generally considered strong. The Bank of France, for example, felt compelled to intervene in the markets to support the franc.

The European Community sought to ease the strains in the system Sunday by devaluing the Spanish peseta and the Portuguese escudo. But the continuing vulnerability yesterday of a number of currencies and the defensive measures adopted by central banks illustrated the skittishness that is gripping the currency markets.

The European nations also received confirmation yesterday that they should not look for relief any time soon from high German interest rates. German officials said they had explicitly rejected calls over the weekend for a realignment of currencies to be accompanied by a rate cut by the Bundesbank.

Germany "will not allow pressure to be brought on Germany to cut interest rates in connection with the realignment," Horst Koehler, the German finance secretary, said in Brussels, Belgium.

The prospect of turmoil among the European currencies touched off considerable buying of the dollar again yesterday among investors who viewed the U.S. currency as a haven. After surging early against the German mark, the dollar eased somewhat and closed in London at 1.6015 marks, down from 1.6100 at the opening but up from 1.5930 marks at the close Friday.

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