DOLLAR STARTS EASIER IN LONDON, STERLING FIRM
The dollar opened easier after markets in
the Far East had sold it down for yen, defeating new attempts
by the Bank of Japan to check the yen's rise through sustained
currency intervention, dealers said.
    But trading was slow and uninsipired and although dollar
sentiment remained bearish, especially against the yen, dealers
expected no major movements ahead of tomorrow's Group of Seven
finance ministers' meeting.
    Sterling remained well bid as two new opinion polls showed
that the ruling Conservative party had increased its strong
lead, increasing the chances of an early election, they said.
    The dollar opened at 145.05/15 yen compared with 146.00/10
at yesterday's European close. It closed at 145.25 yen in Tokyo
after New York's 145.85/90.
    The dollar opened at 1.8195/8205 marks after yesterday's
close in Europe of 1.8245/55. It closed at 1.8205/15 in Tokyo
after finishing at 1.8260/70 in New York.
    Sterling opened marginally weaker on its trade-weighted
index, dropping one basis point to 72.3. But it started firmer
at 1.6213/23 dlrs against 1.6163/73 last night. It was also
firmer against the mark.
    The pound opened at 2.9540/9575 marks against 2.9490/9530
in Europe last night. But it lost some ground shortly after the
opening, trading quietly around 2.95 marks.
    Dealers said that with uncertainty still surrounding the
dollar, yen and mark, sterling looks strong and attractive on
due to an apparent surge of support for the ruling Conservative
party, relatively high interest rates and a strong economy.
    One opinion poll today showed the Conservatives had a
13-point lead over the opposition Labour party and a 17-point
lead over the Liberal-Social Democratic Alliance. Another
forecast a 92 seat Conservative majority in a new parliament.
    One dealer reported a large sterling buying order from a
Japanese institution earlier today.
    But dealers were cautious to push sterling much higher amid
wariness of intervention by the Bank of England. The bank was
thought to have intervened repeatedly yesterday but it was not
sighted in the market today, dealers said.
    On the dollar, dealers said all eyes were turned to
Washington where finance ministers and central bank governors
of the Group of Seven leading industrial nations will meet
tomorrow to review their February 22 Paris currency
stabilisation pact.
    Few expect the meeting to produce more than a vaguely
worded confirmation of the Paris goals of currency stability
and increased economic cooperation.
    This outcome would almost certainly lead to renewed dollar
weakness, especially against the yen, with levels around 140
yen well within reach, some dealers said.
    "But you never know. Perhaps the Japanese do come up with
some sort of stimulation package that would satisfy the market
after all," a dealer with a U.S. Bank said. He noted news that
Japan was working out a reflationary supplementary 1987 budget.
    A senior official of the Japanese ruling Liberal Democratic
Party said earlier today the party has drawn up the outline of
a reflationary economic package including a 5,000 billion yen
supplementary budget for fiscal 1987.
    The dollar opened at 1.5130/40 Swiss francs against
1.5180/90 in Europe. It opened at 6.0525/75 French francs, down
from its European close of 6.0660/0710.
 REUTER
