D mark rallies as dollar surge falls profit taking

THE deutschmark has rallied on the foreign exchange markets, with the pound losing almost two pfennigs to DM2.3040. The US dollar also lost steam due to profit taking on the greenback, and continuing uncertainties about the possibility of a solution to the US budget imbroglio.

The dollar was trading in late afternoon at DM1.4385, well down from Thursday's DM1.4545 close in London. In Dublin the pound rose by almost a cent to $1.5949.

The dollar was also weakened by profit taking, especially in Japan traders said. After the US currency shot up above 106 yen on Thursday, Japanese investors were able to rack up profits of up to 3 per cent as the dollar had stood at a mere Y103 at the start of the week.

The market showed little reaction to the announcement of the resignation of Japanese Prime Minister Mr Tomiichi Murayama, as no succession crisis is expected. The ruling coalition should stay on the job.

The D mark firmed against most other European currencies, mainly because of the dollar's decline. The French franc suffered from statements by Budget Minister Mr Alain Lamassoure pointing to delay in an ambitious reform of the French tax system.

In busy trading in Dublin, the pound fell back against the German currency. It remains the weakest currency in the ERM band.

Sterling also weakened and the pound edged back over the 103p barrier, closing at 103.2p.

European stock markets, jolted by lower bond prices and lacking encouragement from Wall Street, also lost interest at the end of a week which began with a series of record highs. In Dublin the ISEQ index of Irish shares fell by more than 10 points to 2280.42.

British shares headed lower as investors took profits after recent record highs, prompted by the decline in New York.