Dollar Reaches a 19-Month High Against Mark

The dollar surged to a 19-month high against the German mark Tuesday, buoyed by signs of a growing U.S. economy.

It closed at 1.8164 marks in New York--its highest since Nov. 22, 1989. It closed Monday at 1.7955.

The dollar also rose against the Japanese yen, finishing at 141.08, up from Monday’s 140.70.

“There’s a continuation of bullish sentiment for the dollar,” said Charles Wheeler, foreign exchange manager of Swiss Volksbank in New York.

The dollar shot higher during Asian trading, with buying from a Southeast Asian central bank fueling the rise, traders said.

Interest in the dollar stems from recent signs of a U.S. recovery. Non-farm payrolls, retail sales, industrial production and producer and retail prices have shown gains recently.

Tuesday’s housing data for May had little effect, according to Katherine Roth, vice president of Generale Bank.

Housing starts rose a slim 0.1% after an 8.2% increase in April. Housing permits gained 7.2%, compared to 2.4% in April. The news boosted the dollar slightly.

Roth said Federal Reserve Chairman Alan Greenspan’s hints that the central bank probably will not intervene had more of an impact.

Greenspan told the House Ways and Means Committee that economic figures over the last several weeks strongly suggested that the bottom is somewhere in the second quarter, which ends June 30.

Analysts said dollar traders, who are looking for the recession to end and interest rates to rise, were heartened by Greenspan’s statements. The dollar is supported by higher interest rates, which increase foreign demand for U.S. investments.

Roth said the dollar was hurt by rumors that Greenspan would resign.

It recovered when White House spokesman Marlin Fitzwater said there was “no basis” for the rumors.

Robert Ryan, corporate foreign exchange manager with Bank of New York, said the dollar was also boosted by expectations of a narrow merchandise trade deficit for April. The Commerce Department will announce the figures today.

“The market figures it’s going to be a deficit of $4 billion to $4.5 billion,” Ryan said.

Ryan noted that there has been no intervention by central banks to bring the dollar down.

The British pound, which has been weak recently, continued its slide against the dollar. Sterling fell to $1.6100 in New York from Monday’s $1.6265.

Other dollar rates in New York, compared to Monday’s rates, included: 1.5645 Swiss francs, up from 1.5435; 6.1725 French francs, up from 6.0975; 1,351.00 Italian lire, up from 1,337.00, and 1.14225 Canadian dollars, up from 1.14175.

STOCKS DECLINE

Key Dow index falls 7.15. D4