The dollar mostly weakened in busy foreign-exchange trading Friday, reflecting what money brokers called growing pessimism about the U.S. currency.
Gold also fell in reaction to sliding oil prices, which ease prospects of inflation and make gold investments worth less as a hedge. Republic National Bank of New York quoted bullion at $408.50 a troy ounce as of 4 p.m. EDT, down $2.40 from the same time Thursday.Some foreign-exchange brokers said the dollar's weakness signaled increasing sentiment that the U.S. trade deficit remains a stubborn political and economic problem, and likely means that the currency will have to decline following a period of renewed strength earlier this year.
"I'm not terribly surprised to see the dollar down," said James Hohorst, director of foreign exchange operations at Manufacturers Hanover Trust Co. in New York. "People are losing faith."
Renato Strauss, a trader at the New York branch of Bank Julius Baer & Co. of Switzerland, said the U.S. currency's weakness reflected an underlying momentum of dollar selling that had continued throughout the week.
Trading was busy, largely due to the common practice of dealers reducing their speculative positions prior to the weekend.
In Tokyo, the dollar fell 0.75 yen to 126.40 yen. Later in London it was quoted at 126.70 yen. By late afternoon in New York the dollar fetched 126.27 yen, down from 127.10 yen Thursday.
The pound weakened against the dollar, largely because of the decline in oil prices. Britain is one of the largest petroleum producers and its economy is dependent on oil revenue.
In London the pound fetched $1.7620, vs. $1.7635 Thursday. In New York, the pound fell further to $1.7615 vs. $1.7636 Thursday.
Other late-dollar rates in New York vs. rates Thursday: 1.7777 West German marks, down from 1.8007; 1.5061 Swiss francs, down from 1.5233; 1.1992 Canadian dollars, down from 1.2010; 6.0900 French francs, down from 6.1527; and 1,327.50 Italian lire, down from 1,342.00.
Other late dollar rates in Europe vs. rates Thursday: 1.7875 marks, down from 1.8005; 1.5135 Swiss francs, down from 1.5210; 6.1115 French francs, down from 6.1630; 2.0170 Dutch guilders, down from 2.0320; 1,332.50 Italian lire, down from 1,341.50; and 1.2022 Canadian dollars, up from 1.1982.
In gold trading, bullion for current delivery fell $3.80 a troy ounce to $408.40 on the New York Commodity Exchange. In London it fell $1.85 to $410.15; in Zurich it fell $2.10 to $409.40; and in Hong Kong it fell $1.34 to $413.15.
Silver for current delivery fell 11.9 cents a troy ounce to $6.223 on the New York Comex. In London silver fell 7 cents an ounce to $6.28.