The dollar fell sharply today after the government's report showing a substantial decline in retail sales reinforced the view that the U.S. economy is weakening. Gold and silver rose.
The dollar dropped more than 4 pfennigs against the West German mark to 3.0575 marks. The British pound was up more than 3 cents.
In Washington, meanwhile, Federal Reserve Governor Emmett Rice predicted in a speech at the Swedish-American Chamber of Commerce that the dollar's climb "may have already ended."
In a prepared text, Rice blamed the dollar's "stunning" appreciation over the last four years on the large federal budget deficit and imbalances in the U.S. current account and trade sectors, adding that those factors can't be sustained.
"The dollar already was on a down trend when Europe opened, breaking through some key support levels, then it broke further after the very substantial retail sales decline," said James McGroarty at Discount Corp. of New York. The government reported retail sales dropped 1.9 percent in March, the steepest decline in 2 1/2 years.
The selling accelerated after Salomon Brothers economist Henry Kaufman said the Federal Reserve is likely to push the federal funds overnight rate lower because of weak economic data. He said the Fed's risk in expanding reserves is "very modest" because, in addition to the economic picture, "inflationary psychology continues to abate."
In London, the pound picked up nearly 3 cents to close at $1.2470 from Wednesday's $1.2185, and in New York, it jumped to $1.2571 from $1.2251.
European closing rates with late New York prices and comparable Wednesday rates in parentheses: Frankfurt, 3.08 marks, down from 3.1378 (3.0575 vs. 3.121); Zurich, 2.6025 Swiss francs, down from 2.6465 (2.573 vs. 2.645); Paris, 9.405 French francs, down from 9.545 (9.337 vs. 9.525).