950829

Dollar drifts lower

against mark

NEW YORK: The dollar drifted lower against the mark in languid trading Monday, as the German currency gained further ground from the resignation of France's finance minister.

"Basically today has been a carry-over from Friday," said Steve Flanagan, foreign exchange trader at Credit Agricole in New York.

French Prime Minister Alain Juppe shocked the currency market on Friday by announcing Alain Madelin had stepped down, saying the finance minister was too aggressive in cutting fiscal reforms.

The political uncertainty caused currency dealers to unload their French franc holdings and seek refuge in the "more-stable" German mark, which served to undermine the strength of the dollar.

Although selling on Monday was far less aggressive, traders remained concerned about just how fiscally responsible the French government will be and what impact the regsignation will have on the dollar.

"The mark has been gaining quite a bit in the last 24 hours. That is definitely weakening the dollar," said Steven Jury, chief dealer at UBS. "There is a good chance it could continue to be pressured."

By late in the New York session, the dollar eased to 1.4651 marks from Friday's 1.4707 marks. The dollar was at 96.73 Japanese yen, up from 96.65 yen Friday.

Despite the dollar's slippage, most dealers said the U.S. currency will likely retain its long-term upward direction that has carried it higher through much of the summer.

"I think the dollar still has a good chance to climb above 1.5000 marks," said Ulrich Beckmann at DB Reseach, a unit of Deutsche Bank.

Traders said the market would be wary of pushing the dollar much below 1.45 German marks, not wanting to test the resolve of the central banks after the success of the last bout of concernted intervention on August 15.

In other late trade, the dollar stood at 1.2073 Swiss francs, down from 1.2090 Swiss francs on Friday.

The British pound traded at $1.5494, down from $1.5505, while the dollar eased to Canadian $1.3383 from $1.3455.-Reuter