ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Exchange Markets Stable

Exchange Markets Stable

ON the world foreign exchange markets the dollar displayed considerable resilience and ruled steady in February as a result of the announcement that the US merchandise trade deficit had declined to 12.21 billion in December 1987 from 13.21 billion in November. After the announcement the dollar surged to yen 131.95. The dollar's rise was checked by Japanese export companies and corporate investors. The Japanese trade surplus was announced on February 15, which also caused the dollar to weaken. The dollar's resilience encouraged the Federal Reserve Board to relax its monetary stance in the face of the still uncertain outlook for the US economy which has been characterised as neither strong nor sluggish. The stance of the US monetary policy presently seems to be aimed at avoiding recession rather than at dollar stability. The accommodative monetary policy was reflected in the easing of euro-dollar interest rates. The deutsche mark hardened against the dollar from 1.6915 to 1.6890 but weakened against the pound sterling to 2.9904 from 2.9644; vis-a-vis yen it depreciated from 76.38 to 76.05. The pound sterling and yen ruled firm against the dollar and deutsche mark.

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