Dollar Declines Against Mark

Sat., Aug. 24, 1996

Associated Press

The dollar fell sharply Friday on dimming prospects for further cuts in German interest rates and a sell-off in American stocks and bonds over renewed fear of rising inflation.

The dollar’s decline left it at a five-month low vs. the Swiss franc and erased its gains against other currencies from Thursday, when Germany’s central bank cut a key lending rate to a record low.

The cut in the German repo rate from 3.30 percent to 3 percent was unexpectedly large. By Friday, currency traders were interpreting it as a sign that the Bundesbank had ended a fouryear trend of lowering rates to stimulate the biggest economy in Europe. Many traders reacted by buying marks and selling dollars.

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