CURRENCY : Dollar’s Slide Continues; Gold Prices Mostly Higher

NEW YORK — The dollar continued to decline Thursday, reaching levels against the Japanese yen and West German mark not seen for two months as a bearish sentiment pervaded currency markets.

Gold prices firmed. Republic National Bank of New York quoted a bid price for gold of $453.15 an ounce as of 4 p.m. EST, up from Wednesday’s late bid of $451.15.

Traders said the dollar continued to suffer from comments made Wednesday by Martin Feldstein, former chief economic adviser to the President, who said the currency should fall to 120 yen in the near term.

In an address at New York University, Feldstein also predicted that the dollar would decline against other currencies over the next several years.

“Those comments are not new, but they triggered losses” in the dollar, said Earl Johnson, a vice president at Irving Trust Co.

The dollar, which closed at 125.575 yen in New York, last traded at that level in mid-January. Traders said the yen continues to strengthen before the close of the Japanese fiscal year March 31 and on the expectation that the Japanese economy will forge ahead.

Expect Larger Deficits

The dollar also weakened somewhat on government reports that personal income grew 0.9% in February and that personal consumption expenditures grew 0.7% during the month.

The figures indicated that consumer spending is picking up again, which likely will result in wider trade deficits, said Nigel Green, a trader at London’s EBC-Amro Bank.

Johnson echoed that sentiment, saying that the “mildly bearish sentiment” toward the dollar is being spurred by “the realization that there will be larger trade deficits later in the year.”

In Tokyo, where the business day ends as Europe’s begins, the dollar closed at 126.30 yen, down 0.85 yen. Later in London, it was quoted at 125.75 yen.

In London, the British pound rose to $1.8435 from Wednesday’s $1.8358. In New York, it cost $1.8420 to buy one pound, up from Wednesday’s $1.83725.

Other late dollar rates in New York, compared to late Wednesday, included: 1.67725 West German marks, down from 1.6916; 1.38625 Swiss francs, down from 1.3985; 5.7045 French francs, down from 5.7470; 1,242.50 Italian lire, down from 1,251.875, and 1.2421 Canadian dollars, down from 1.2430.

Bullion Advances

Other late dollar rates in Europe, compared to late Wednesday, included: 1.6800 West German marks, down from 1.6915; 1.3885 Swiss francs, down from 1.3990; 5.7120 French francs, down from 5.7450; 1.8980 Dutch guilders, down from 1.9005; 1,246.95 Italian lire, down from 1,253.25, and 1.2426 Canadian dollars, down from 1.2434.

Gold prices moved mostly higher. On the New York Commodity Exchange, gold closed at $454.10, up from $451.10 on Wednesday.

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