Rate Cut Talk Undermines Dollar

Fri., Sept. 25, 1998

The dollar fell against major currencies Thursday on expectations of an interest rate cut and concerns about fallout from the rescue of a major hedge fund.

Falling U.S. and European stocks also pressured the dollar lower.

“The dollar is following so many things. It follows the stocks, it follows the comments” Federal Reserve Chairman Alan Greenspan made Wednesday suggesting a U.S. rate cut next week, said Agostino Floro, assistant vice president of foreign exchange at Bank Austria.

The dollar faced even more selling pressure Thursday after Southwest Bank of St. Louis cut its prime rate to 8 percent from 8 percent. Southwest has anticipated the Fed’s moves previously.

Exchange Currency in Dollars Dollar in foreign currency

Canada .6609 1.5130

France .1779 5.6205

Germany .5967 1.6760

Great Britain 1.6958 .5897

Italy .000604 1656.70

Japan .007402 135.10

Mexico .098522 10.1500

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Rate Cut Talk Undermines Dollar

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