The French franc continued to drop yesterday for the fourth consecutive trading day. At the close, the franc stood at 4.923 against the dollar after having opened at 4.747.
As the franc fell, gold prices soared in Paris. The price of 2.2-pound gold ingots hit a record 29,840 francs, breaking a previous high of 29,350 francs, set in December, 1974.
Since latest pressure on the franc started last Wednesday amid predictions of a left-wing victory in next month's elections, it has depreciated by 4 percent against the dollar, 4.6 percent against the West German mark and 5.5 percent against the Swiss franc.
In Europe's major gold markets, London and Zurich, the price was $10 an ounce below Paris. The Zurich price was $175.625 and ounce yesterday, up 25 cents from Friday. The London price, $175.65, rose almost a dollar over Friday.
The dollat continued to be tied to the franc and recorded slight drops against most major Europaen currencies.
Ronald Koven, of The Washington Post Foreign Service reported that most financial commentators in Paris expressed surprise that the value of the franc had not started to decline earlier.
One explanation offered is that big money gradually started taking its precautions as long as two years ago by investing elsewhere and that there is very little money still available for a massive flight from the franc.
T basis of the sale of small amounts in international mone basis of the sale of small amounts in international monetary terms. The Bank of France reportedly spent $500 million last week to support the franc - not enough to turn the tide but enough to avoid the accusation that the bank was sitting idly by.
There was one unconfirmed report that the government would not intervene meaningfully to bolster the currency until it hit the psychological level of 5.00 to the U. S. dollar.
An official explanation for letting the rate slide was that supporting it could quickly exhaust France's official reserves of more than $20 billion, recalling that the Bank of France spent $5 billion in one week to support the franc in 1976. It was also officially suggested that for the Bank of France to intervene massively would indicate more concern than is warranted and might lead to panic.
Yet such operations are routine and the amounts being trade are so small that it would have probably cost the French central bank very little to do the job, Koven reported.