Foreign Exchange for Thursday, Nov. 21, 1985 : Dollar Mostly Lower; Gold Prices Rise
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NEW YORK — The dollar plunged lower against most world currencies Thursday because of the prospect of lower interest rates and higher prices for oil, dealers said. Gold prices rose.
The Federal Reserve Board’s index measuring the value of the dollar against 10 other currencies weighted on the basis of trade was 127.37, the lowest since March 14, 1984, when it stood at 126.92.
“It was a very exciting day,” said Gary Dorsch, senior money market economist at G. H. Miller & Co. in Chicago.
Dorsch said most of the activity centered around “the prospect of lower federal interest rates and the prospect that the U.S. Federal Reserve will soon lower the discount rate to stimulate the economy.”
The discount rate is the rate at which banks borrow from the Federal Reserve.
Dorsh said a U.S. Commerce Department report on consumer spending earlier in the day lent support to the idea of a possible discount rate cut to boost the economy. The report said consumer expenditures were off by 0.9%.
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