P.M. BRIEFING : Dollar Rises Marginally in Europe in Mild Reaction to Fed Rate Hike
LONDON — The dollar finished marginally higher in Europe today as the market reacted without enthusiasm to a hike in the U.S. discount rate. Gold prices fell.
Foreign exchange dealers said the U.S. Federal Reserve Board’s move to raise the discount rate to 7% from 6.5% initially caused the dollar to steam to a session high of 1.8330 West German marks.
Although dealers had been complaining about the lack of strong action from the Fed for months, some thought that the rate hike was not strong enough.
“It should have been a full point, many people thought, and the dollar then went down,†said a trader at a large Frankfurt bank.
Others said the move came too late and had only a symbolic effect that wore off. The dollar then traded in quiet ranges.
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