Dollar Higher Against Mark
NEW YORK (AP) _ The dollar rose to a 16-month high against the mark on Tuesday after a German central banker encouraged dollar buyers amid economic figures that continued to show Germany at least on the brink of recession.
The mark’s weakness gave the dollar a lift against other European currencies and the Japanese yen. During the day, the dollar reached its highest level against the mark since January 1995.
The global reaction to the comments came as continued economic data indicated that Germany is nearing if not in recession.
``Basically, the story today was written in Germany with the decline of the Deutsche mark,″ said Guillermo Estebanez, a foreign exchange economist at the Bank of America office in San Francisco. ``Today was the day for the Deutsche mark.″
By 4 p.m. in New York, the dollar traded at 1.5425, marks, up from 1.5343. The dollar also at 107.18 yen, up from 107.08 Monday.
The global foreign exchange market paid close attention Tuesday to remarks by Olaf Sievert, president of the regional central bank in Leipzig, part of the powerful Bundesbank.
The central bank for months has helped the dollar revive from post-war lows set a year ago either through verbal or coordinated intervention.
With the dollar trading about 1.5300 marks, Sievert said: ``We wouldn’t have to have any concern about imported inflation if the dollar were a couple of pfennigs higher.″
Investors used those words to dump the mark in favor of the dollar, pound and other currencies. The British pound reached a 14-month high against the mark.
For a good portion of the day, mark-yen transactions stopped the dollar from rising against the Japanese currency, but the dollar rallied in late afternoon.
Randolph L. Donney, director of capital markets research at Pegasus Econometric Group, attributed the dollar’s late rise against the yen to profit-taking on the yen.
``There’s general dollar bullishness right now,″ Donney said.
That comes as Germany gets fitted for a definition of recession, a tag its officials have been avoiding.
According to a Ministry of Economics summary released Tuesday, German growth shrank 0.5 percent in the first quarter of 1996 from three months earlier.
On Monday, the Organization of Economic Cooperation and Development said it expects 0.5 percent gross domestic product growth in Germany in 1996, down sharply from what it was predicting six months ago.
``Any signs of a recovery are few and far between,″ said Rolf Schneider, a macroeconomic analyst at Dresdner Bank in Frankfurt.
Other late dollar rates in New York, compared with Monday: 1.2701 Swiss francs, up from 1.2615; 5.2220 French francs, up from 5.1945; 1,559 Italian lire, up from 1,552; and 1.3707 Canadian dollars, down from 1.3720.
The British pound traded at $1.5110, down from $1.5135.