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US$ drops as war fears ease


Financial Post, Daily edition, Tuesday, February 24, 1998

The US$ yesterday suffered its biggest loss against the mark since December, and was little changed against the yen, as signs that a crisis in the Persian Gulf may be abating eroded demand for the US$ as a safe haven.

Traders propelled the US$ to a one-month high against the yen earlier after officials from the Group of Seven industrial nations ended a meeting in London on the weekend without suggesting they would take steps to boost Japan's sagging currency.

Yesterday's UN-Iraq accord eased concern that the U.S. attack Iraq.

The US$ fell to 1.7939 marks, from 1.82 marks Friday. It was the currency's worst performance since Dec. 11. The US$ was little changed at 127.77 yen from 127.8 yen.

Many traders flocked to the US$ in recent weeks as a refuge from possible conflict in the Persian Gulf. They sold US$s for marks and yen after UN Secretary-General Kofi Annan and Iraqi Deputy Foreign Minister Tariq Aziz signed the accord.

The US$ could resume its climb against the yen in the weeks ahead amid perceptions Japan is not doing enough to lift its economy out of a seven-year slump and dwindling chances G-7 central bankers will try to stem further yen weakness.

``The G-7 was in fact not concerned with yen weakness, and gave no hint of intervention,'' said Jeremy Fand, a currency trader at BankBoston in Boston. ``And the Japanese made it clear they aren't going to adopt any additional fiscal stimulus.''

The US$ could rise as high as 133 yen by the end of March, Fand said.

Elsewhere, the British pound rose to US$1.6469 from $1.638 Friday.

The US$ fell to 1.4481 Swiss francs from 1.4667 francs and to 6.0166 French francs from 6.096 francs. The US$ fell to to 1770 lire from 1792 lire.

The C$ fell to US70.26 cents from US70.44 cents Friday. The US$ rose to $1.4232 from $1.4197.

Source: This information is provided by the Financial Post.

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