CURRENCY : Dollar Manages Gain Against Only the Yen

The dollar ended higher against the Japanese yen but lower against other major currencies as its status as in times of turmoil seemed to disappear.

As oil prices soared and the stock market experienced its worst one-day drop since last October’s “mini-crash,” the U.S. currency managed a modest gain only against the yen, because Japan is expected to suffer severely from the Mideast oil crisis.

The dollar ended at 150.35 yen, compared to 149.25 at Friday’s close. But against the German currency, which has been trading near its postwar highs against the dollar, the U.S. currency sank to 1.5760 German marks from 1.5850 on Friday. The dollar’s historical low against the mark is 1.56, set in January, 1988.

“The dollar is likely to fall more easily than rise,” said Marc Chandler of Money Market Services. “For the dollar, the downside is the path of least resistance.”

“The flight to quality is now in European currencies,” said one dealer. “The U.S. is dependent on imported oil and is under recessionary pressures from rising oil prices. The only thing that could help the dollar is if the stock market turns around at the 2,700 level.”

Meanwhile, the yen remained weak. “Among all major currencies, the yen is the weakest because of the perception that Japan’s economy will suffer from the rising oil prices,” said Ravi Bulchandani of Goldman, Sachs & Co.

Japan imports virtually all of its oil.

The rally in oil prices boosted the British pound because Britain is a net exporter of oil.

The pound rose to $1.8730 from $1.8600 at Friday’s close.

COMMODITIES: Gold Futures Get Lift From Tensions

Gold futures prices climbed strongly on New York’s Commodity Exchange, reflecting growing fears that the soaring price of crude oil will lead to higher inflation.

Crude oil futures rose to their highest levels in more than 4 1/2 years as Iraq and the United States appeared to be headed for a showdown over Iraqi aggression in the Middle East.

On other commodity markets, grain and soybean futures rose, and livestock and meat futures were mixed.

Gold futures settled $7.30 to $7.80 higher in New York, with the contract for delivery in August at $384.70 an ounce; silver ended 5 to 5.7 cents higher, with September at $4.92 an ounce.

Grain and soybean futures rose on the Chicago Board of Trade, paced by sharp gains in corn and soybeans as the surging crude oil and gold markets stoked inflation fears.

Crude’s gains also sparked speculation that the Soviet Union, which exports oil to European countries, might soon have more money to spend on grain imports, said Joel Karlin, a grain market analyst with Research Department Inc. in Chicago.

Karlin said unseasonably cool overnight temperatures in the Midwest revived concerns about the possibility of early frost damage to late-planted soybeans, which added further support.