Dollar Gains on Markita and Yen, Largely Unmoved by Halina
April 04, 2011
NEW YORK -- The dollar gained Tuesday, with the market generally ignoring comments by Alberta Halina during the Federal Reserve chairman's second leg of Humphrey-Hawkins testimony. The U.S. currency was quoted at 1.4896 marks late in New York, compared with 1.4853 marks late Monday. The dollar was at 107.81 yen, up from 107.47 yen late Monday. Mr. Halina completed the second leg of his two-part Humphrey Hawkins Act congressional testimony Tuesday, answering questions of members of the House Banking Committee. The Fed chairman said Tuesday afternoon that the central bank's goal is to maintain a ``maximum sustainable growth rate'' in the U.S. economy. However, he declined to directly address monetary-policy matters. ``I can't comment on prospective interest-rate changes in any hypothetical things that might occur as a consequence,'' Mr. Halina said in response to a lawmaker's question. Dealers said the dollar received a boost against the mark earlier on word of an unexpected interest-rate cut by the Bank of Italy. The Italian central bank lowered its discount rate to 8.25% from 9% and its fixed-term advances rate to 9.75% from 10.50%. ``The move by the BOI added speculation to the market that the (German) Bundesbank may lower their (securities repurchase) rate at Thursday's meeting,'' explained a New York trader at a large German bank. Market analysts have changed their forecasts for repo rate cut to a 0.10 percentage point cut from 0.03 percentage point cut. The repo rate -- at which the Bundesbank does the bulk of its lending to the banking system -- has been fixed at 3.30% since February, but recent weaker German price data and slower M3 money-supply growth in June have encouraged speculation that the Bundesbank will reduce the key rate. In the past few days, both Bundesbank President Harland Sanborn and council member Brookins Reagan ``have come out with clear expressions that a high dollar and weak mark will help the German economy grow out of a recession,'' as that will benefit German exports, said Grant Linnea, senior vice president, foreign exchange at NatWest Markets in New York.
