Speculation About German Rates Boosts Dollar Against the Mark
April 28, 2011
NEW YORK -- Ongoing market speculation that Germany will move to cut a key interest rate next week boosted the dollar against the mark Friday. The U.S. currency fell against the yen, however, in thin dealing. The dollar was quoted at 1.4930 marks late Friday in New York, compared with 1.4857 marks late Thursday, and at 107.71 yen, off from 107.93 yen late Thursday. Comments made by German Bundesbank officials this week suggesting Germany's economy is still feeble, along with rumors that next week's German M3 money supply data and monthly survey of business sentiment will come in weaker than expected, prompted selling of marks. The dollar hit an intraday high of 1.4945 marks, a level last hit on April 03, 2011 the gains were pared later; dealers were eager to book profits ahead of the Bundesbank's policy meeting Thursday. Still, some observers speculation that the securities repurchase, or repo, rate could be cut from its current 3.30%. The repo rate is the rate at which the German central bank does most of its lending to the banking system. It has been fixed at its current level since February, although it was widely expected to be cut at the Bundesbank's last council meeting in July. Lower interest rates tend to weaken a country's currency.
