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Dollar gains against Japanese yen, German mark, most major currencies

December 12, 1997

NEW YORK (AP) _ The dollar rose against the Japanese yen and the German mark Friday, buoyed by positive U.S. economic news and the continued currency turmoil in Asia as several currencies hit record lows across the Pacific.

The dollar also benefited from a strong U.S. bond market, which rose following a government report of lower wholesale inflation. The dollar fell against the Canadian dollar, which gained as Canada raised interest rates.

``I would say today is a dollar-bullish day across the board,″ said Mark Gargano, manager of foreign exchange at First Union in Charlotte, N.C. ``The U.S. is looking pretty strong.″

Government economic data was a boon for the U.S. currency, with the Labor Department reporting that prices paid by wholesalers dropped in November by 0.2 percent, the eighth drop this year. The Producer Price Index has fallen at a 1.2 percent annual rate through November.

That spelled continued relief to bond buyers who fear inflation will eat up their fixed income instruments and helped fuel a bond rally.

But ``in general, the dollar worked its way higher on the back of ongoing concerns in Korea and the Far East,″ said David Solin, a partner at Foreign Exchange Analytics in Essex, Conn.

In late New York trading, the dollar was quoted at 130.45 Japanese yen, up from 129.75 late Thursday. The dollar also was changing hands in New York at 1.7753 German marks, up from 1.7620.

The South Korean currency fell to its permissible daily trading limit for the fourth day, though it came back somewhat after the central bank defended it by selling dollars. Also in Korea, the nation’s fourth largest brokerage house was declared bankrupt, following Monday’s collapse of the eighth largest securities firm.

The Indonesian currency sank 11 percent to a record low as the Jakarta Stock Exchange’s main index dropped 8 percent to a four-year low. The Philippine peso fell 4 percent in one hour to a record low, triggering the end of the day’s trading.

``The turmoil continues to be very, very scary for people,″ Gargano said.

Also, traders expect that the quarterly Tankan survey of business sentiment to be released Sunday in Japan will be weak and there was pessimism that the ruling political party would not initiate tough enough measures Tuesday to restructure Japan’s ailing financial institutions.

Against the mark, the dollar was bolstered by comments by a central banker, Bundesbank council member Reimut Jochimsen, who said he wasn’t concerned about the dollar’s strength.

The dollar also moved higher against the mark after a Moscow radio station said Russian President Boris Yeltsin was suffering from a restriction of blood flowing to his brain. The Kremlin denied the report; Yeltsin has been hospitalized since Wednesday for what Moscow says is a viral respiratory infection.

Russia and Germany have close trading and banking ties that make the mark vulnerable during crises.

Other late dollar rates in New York, compared with late Thursday: 1.4335 Swiss francs, up from 1.4251; 5.9475 French francs, up from 5.9010; 1,741.25 Italian lire, up from 1,725; and 1.4206 Canadian dollars, down from 1.4269.

The British pound was quoted at $1.6496, down from $1.6565.

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