The dollar was up slightly against most currencies yesterday in very light trading as international markets waited for news of the hostage release from Iran and the accompanying shift of billions of dollars into Iranian hands.
Although the Iranians are considered likely to transfer their unfrozen dollars into other currencies as soon as possible, most traders believe this will not rock currency markets too much. The dollar almost certainly will be supported in a coordinated way by central banks all over the world if the Iranian government starts to unload the U.S. currency.
"It's still very unclear what effect the transfer of Iranian assets will have because there isn't any real way to predict what the Iranians will do with them," one trader said.
Another trader said if the Iranians turn the dollars recovered from the United States into other currencies, "they're likely to take a short-term beating on exchange rates." He said any foreign currencies bought by Iran probably would be converted back into dollars as the funds moved back through the international financial system.
The dollar quoted in New York at: 2.0049 marks, up from 290030 Friday; 4.6395 francs, up from 4.6325; 1.8240 Swiss francs, ujp from 1.8150; 202927 yes; down from 202.87; and 1.1911 Canadian dollars, up from 1.1904.
The dollar rose a little against the British pound at $2.4085 from $2.3995.
The Iranians may decide just to take their dollars out of U.S. banks but not to convert them into other currencies.
But it was reported in London that the Iranians were interested in converting some of their dollars into sterling. However, Bank of England sources told the Dow Jones News Service that the British would not make an exception for Iran to its policy of disallowing foreign governments to hold large amounts of sterling.
Since the sterling crisis of 1976 and 1977, the British government has had an agreement with central banks that the latter will not add to their sterling balances. The Iranians were interested in increasing their sterling holdings, Dow Jones reported in London yesterday.
Gold markets also were not affected very much by the imminence of a settlement in Iran and the return to Iran of 1.6 million ounces of Iranian gold worth about $1 billion.
Gold for January delivery fell $1.90 an ounce to $562.50 on the Commodity Exchange Inc. In later dealings, Republic National Bank quoted gold at $563 an ounce, off $2 from Friday's late price. Gold rose $4 in Zurich to $564.50 and climbed $1 in London to $566.25.