Dollar Hits High Against French Franc, British Pound for Third Consecutive Day
The U.S. dollar turned in another record-shattering performance yesterday, setting new highs against the British pound and the French franc and setting an 11 1/2-year high against the West German mark for the third consecutive day.</br></br>In late New York trading yesterday, the dollar stood at 2.9550 marks, ahead of the Wednesday record level of 2.9535. It also advanced to 9.0625 French francs, from Wednesday's record of 9.0590 francs. The pound declined still further, to $1.2834 from the previous low of $1.2837, also set on Wednesday.</br></br>"Even those of us in the strong dollar camp," said Nicholas Sargen, a vice president of Salomon Brothers. Inc., New York, "are surprised at how strong the dollar is." Traders said the dollar's strength yesterday -- which occurred despite a decline in long-term U.S. interest rates; an unexpected decline in M1, the basic U.S. money supply measure, and some limited profit-taking from the currency's advances earlier this week -- almost surely means the dollar will shortly test the critical three-mark level.</br></br>Any decline in U.S. interest rates hurts the dollar by making dollar-denominated investments look less attractive. Short-term U.S. interest rates, however, were relatively unchanged yesterday. Declines in M1 tend to hurt the dollar by easing pressure on the Federal Reserve to tighten credit conditions, which can lead to upward pressure on interest rates. But the decline in M1 in the latest reporting week was only $700 million; the market had generally expected an increase of about $500 million.</br></br>In early trading in Tokyo Friday, the dollar rose against the Japanese currency to 244.60 yen from 244.05 in New York yesterday afternoon.