NEW YORK -- The dollar slid against the German mark yesterday, hurt by concerns about high German interest rates and the mark's strength against other European currencies, traders said.
The Bundesbank's insistence on maintaining its high interest rates continues to weaken the dollar, even though U.S. economic data point to recovery, traders said.
That policy was reiterated yesterday by council member Johann Wilhelm Gaddum, who stressed the need for high rates and a strong mark, traders said.
"What we're seeing is not just a dollar-mark story," said Lisa Finstrom, a currency analyst at Lehman Brothers. "The [mark] continues to benefit from intra-European flows."
Investors' confidence in the Bundesbank's dedication to low inflation and high rates insure that whenever tensions within the European rate mechanism heat up, the mark emerges relatively unscathed, she said.
The dollar finished at 1.5569 marks, down from 1.5932 marks Friday.
Meanwhile, investors have concluded that the Federal Reserve is unlikely to raise interest rates while inflation remains under control, traders and analysts said.
The dollar isn't likely to drop below about 1.53 marks because of the rosier economic prospects in the United States and the conviction that German rates will decline sooner or later, traders said.
The dollar weakened to 1.3936 Swiss francs by the close, from 1.4285 francs Friday.
The U.S. currency finished at 123.83 Japanese yen, down from 124.95 yen last Friday.
The dollar fetched 5.3250 French francs late in New York, down from 5.4250, and 1,376 Italian lire, compared with 1,400 Friday. The dollar finished at 1.2728 Canadian dollars, compared with 1.2786 Friday.