Dollar Slides to Its Lowest Level in Months On Jitters Over Inflation and Drop in Rates
NEW YORK -- The U.S. dollar took a pummeling yesterday as investors focused on the prospect of a further decline in U.S. interest rates and on fears of rekindled inflation.</br></br>As news reports confirmed expectations of a landslide reelection victory by President Reagan, traders turned their attention to the more negative factors affecting the dollar. The first wave of selling came midmorning in Tokyo and later swept through London and then New York.</br></br>The dollar hit its lowest levels in months against major foreign currencies. Investors moved out of long-term U.S. government bonds and turned to such inflation hedges as gold, silver and Swiss franc deposits.</br></br>By early afternoon in Tokyo, the dollar had slipped as low as 240.40 yen after opening at 243.10.</br></br>In Frankfurt, the dollar plunged three pfennigs from its price at the Tuesday fix, to its lowest level since Sept. 3. After rallying briefly in New York it slid further in late trading to 2.9120 West German marks, down sharply from Tuesday's late New York quote of 2.9455 marks. In Paris, the U.S. currency fell below nine French francs for the first time since Sept. 4 and was quoted in late New York trading at 8.9450, down from Tuesday's quote of 9.0080 francs. In New York, the dollar fell below the psychologically significant level of 240 yen, while the British pound traded at $1.2793, up 1.65 cents from Tuesday's late New York quote.