Dollar at 4-week high against mark

April 06, 1994|By Bloomberg Business News

NEW YORK -- The dollar rallied against major currencies yesterday, rising to a four-week high against the Deutsche mark, as a rebound in stocks and bonds restored confidence in U.S. assets.

"The buck is back," said David De Rosa, director of foreign-exchange trading at Swiss Bank Corp. "There's a massive dollar-buying binge going on."

The dollar rose almost two pfennigs to 1.7180 Deutsche marks Tuesday, its highest level since March 8. It traded at 1.7142 marks late in New York, up from 1.6964 marks Monday. The dollar rose to 104.35 yen from 103.24 yen.

Plunging stocks and bonds depressed the dollar last week. The rout in the bond market ended yes terday and stocks rebounded.

"People became more interested in buying dollars because the stock and bond markets appeared to stabilize," said Tom Benfer, director of foreign exchange trading at the Bank of Montreal.

It's too early to say "if the dollar has turned the corner and is heading higher," said Ezra Zask, president of Ezra Zask Associates, a Norfolk, Conn.-based currency-trading fund with $150 million under management. "But today's rally should make people reluctant to sell it aggressively."

Flows of capital into U.S. stocks and bonds pushed the dollar higher, Mr. Zask said. Those flows are important to determine exchange rates now because so many currency speculators have been "blown out of the market" by huge losses, he said.

"Capital flows are driving everything right now," he said. "A lot of the speculators are on the sidelines."

Concern about Japanese Prime Minister Morihiro Hosokawa's political future helped the dollar gain against the yen.

Renewed faith in U.S. assets also helped the Canadian dollar gain, traders said. The Canadian dollar rebounded from seven-year lows against the U.S. dollar, rising to 72.34 U.S. cents from 71.60 cents on Monday.

The dollar gained against most European currencies. The British pound fell to $1.4645 from $1.4662 late Monday. The dollar rose to 5.8600 French francs from 5.8006 francs, and strengthened to 1.4475 Swiss francs from 1.4251 francs. It rose to 1,658 Italian lire from 1,639 lire.

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