Dollar Falls against Europe's Currencies as Germany Tightens Interest Rates
NEW YORK -- A startling decision by the German central bank to raise key interest rates, coinciding with demoralizing comments about the U.S. economy, pushed the dollar down against European currencies.</br></br>The greenback rose slightly against the yen and the Canadian dollar. But rather than representing optimism about the dollar, those advances reflected a broad yen sell-off and the fact that interest rates in Canada are falling even faster than in the U.S.</br></br>In late New York trading, the dollar was quoted at 1.4770 marks, down from 1.4880 marks late Wednesday in New York. Against the Japanese currency, the dollar rose to 131.27 yen from 131.15 yen. Sterling was trading at $1.9660, up from $1.9625.</br></br>In early trading in Tokyo Friday, the dollar was trading at about 131.35 yen, down slightly from Thursday's Tokyo close of 131.40 yen. Meanwhile, the U.S. currency was trading at 1.4800 marks, off a bit from 1.4895 marks at Thursday's close.</br></br>Reports late in the New York afternoon that Iraqi vehicles were massing on the Saudi border helped pull the dollar out of its troughs for the day. However, the Pentagon discounted reports of a "massive deployment" of Iraqi troops. Even without that denial, traders have become so jaded to news about the Mideast the war was "a secondary situation" for the market, said Al Soria, foreign-exchange manager at Kansallis Osake Pankki in New York.