By Philip I. Rosenbaum
AP Business Writer
NEW YORK (AP) – The dollar fell overseas but ended higher in U.S. trading Friday despite news of falling interest rates in the United States.
Gold prices also eased abroad but rose slightly in U.S. trading.
“The market has been so bearish and so anticipatory of the dollar’s decline based on lower interest rates that when it happened it was sort of fait accompli,” said Robert Ryan, corporate foreign exchange manager at Bank of New York.
But the appetite for dollars still appeared weak and the currency was likely to continue its slump, he said.
Jerry Egan, a currency trader at the Bank of Boston, said the market’s movements Friday were not surprising and were very technically oriented.
“I think we may have seen the low, but I wouldn’t want to stake a whole lot on it,” he said.
The dollar ended slightly lower in European trading Friday after the Federal Reserve in Washington cut the discount rate, the loan fee to commercial banks, a half percentage point to 5 percent, an 18-year low.
Lower U.S. interest rates are meant to stimulate lending and make the economy grow. But they also make dollar-based securities less attractive to international investors, tending to weaken the dollar’s value.
But traders said the foreign exchange market had for the past two weeks anticipated the rate cuts, so the initial impact of the news wore off and helped the dollar rebound later in the United States.
In London, the British pound fell to $ 1.7320 from $ 1.7335 late Thursday. In New York, sterling cost $ 1.7295, cheaper than $ 1.7325 late Thursday.
In Tokyo, the dollar fell to a closing 134.45 Japanese yen from 134.77 yen at Thursday’s close. Later, in London, it was quoted at 133.90 yen. In New York, the dollar closed at 134.15 yen, up from 134.08 Thursday.
Other late New York dollar quotes, compared with Thursday’s prices, included: 1.6850 German marks, up from 1.6845; 1.4800 Swiss francs, up from 1.4765; 5.7550 French francs, up from 5.7400; 1,266.00 Italian lire, up from 1263.50; and 1.13575 Canadian dollars, down from 1.13725.
Other late dollar rates in Europe, compared with late Thursday, included: 1.6830 German marks, down from 1.6860; 1.4755 Swiss francs, down from 1.4780; 5.7345 French francs, down from 5.7420; 1.8975 Dutch guilders, down from 1.8990; 1,260.00 Italian lire, down from 1,263.45; and 1.1356 Canadian dollars, down from 1.1369.
Gold fell in London to a late bid price of $ 344.25 a troy ounce from $ 346.25 bid late Thursday. In Zurich, the metal fell to a closing bid of $ 344.25, down from $ 346.05 bid late Thursday.
Earlier, in Hong Kong, gold fell $ 1.97 to close at a bid $ 344.44.
PHILIP ROSENBAUM 