European Stars And Stripes (Newspaper) - September 25, 1988, Darmstadt, Hesse Page 18 the stars and stripes business news Rise and fall of Dollar not always logical for anyone who thinks the value of inc Dollar moves s Sec magically up or Down As Learned men and women carefully study the lairs worldwide figures on unemployment Trade imbalances Gross National product inflation retail sales and conium is purchasing Power think again. It s nut necessarily so. An interesting Case in Point shul look place inst week illustrates How emotion particularly fear and misinformation also often help to de term inc the purchasing Power of our paychecks in Europe at least for a Little while. To s jump Back in Lime a few Days to Laic thursday afternoon on the London and Frank Furt West Germany currency exchanges. The Dollar which had traded All week in the narrow Range Between 1.86 and 1.88 Marks was making a late push toward the upper end of that scale when a Rumor that president Cagan had suffered a heart attack swept through the s no telling How or by whom the Rumor was started bul what mailers is thai within min Ules the Buck was headed lower. It fell from by Randy Mcclaln i.n77nio 1.8742 Marks before bouncing above when the White House issued a statement making dear that inc president my Fine. Traders often turn to the Dollar As a Safe Hinen currency when political or military upheavals occur in other parts of the Globe but in this Case the Dollar lost in value As traders react Vej out of fear that the president s presumed illness would Hurt the . Economy. If Reagan were incapacitated some traders reasoned. . Economic policy might be negatively Alec cd and the Dollar would t be Worth As much. Those trader sold dollars for Marks de Flating the Buck s value in inc process the in Pacl of the Reagan Rumor turned out in he minimal As Well As Short lived. Once the while House s denial was publicized the Dol Lar Row in value to As much As 1.8825 Marks. At thai Point More tangible factors took their loll to push inc Dollar slightly lower again. The Federal Reserve sold substantial amounts of dollars to keep the Greenback under control Al Orliw Marks. Earlier in the Day. West Cic Many s Bundesbank also had sold a relatively modes $31 million in dollars according to one american banker in Frankfurt. Once again inc intervention apparently worked to stabilize currency markets. The Dol Lar ended the Day ill 1.8795 Marks in London. On Friday the Buck continued to Trade be tween 1.8760 Marks and 1.88 Marks in Frank furl showing Little inclination to Boll higher As it had the Day before. The military Exchange Rale remained steady throughout All this excitement i started and Cendt j last week Al l .s5 Marks. The same rate will hold True at least through monday based on an end of Lac Wick Price fixing. Currency analysts in Frankfurt and London Are now expecting a quiet twp 10 three weeks. No Road of developments site acting currency markets Are expected to emerge from this week s Memling of the International monetary fund and world Bank in Kivlin. Arid finance ministers from the group of seen. Who have been holding meetings of their have expressed satisfaction with the to lbs s current value. Ilsa loss up now Aslo whether oktoberfest or the summer olympics Are More interesting than the said the american banker in Frankfurt who spoke on the condition thai his name nol be used. Traders have been bored the last four or five App program in Germany provides portable credit by Charlie Bowde Munich Bonu Munich West Germany there s no plastic charge card to stick in your Wallet bul with the centralization of deferred payment accounts in Germany customers now can take their App account with them when shopping at More than 200 Exchange in Hie country. Exchange officials have been working on developing the centralized program Tor nearly three years consolidating account record from across Germany into a Central office in Kaiser Lautem and cutting both Tim and inconvenience for customers and account manag ers said Rick Thompson of cafes. Ii was decided to develop a network for Germany thai would give customers Tolat portability Thomp son said. The concept had been tried previously on a manual format but proved to be costly and time con suming he said. Thompson formerly chief of the fiscal policy and procedures Branch at the Exchange s european head quarters in Munich left recently to take a position at cafes worldwide Headquarters in Dallas. This latest change to the Exchange s in House credit program goes Hanc in hand with the development of a Germany wide telecommunications network to link More than 200 exchanges and allow data Exchange via computer said Sam Lankford who head cafes Europe s information systems division. Installation this summer of a new j3 million mainframe computer in Munich quadrupled storage capacity and significantly increased data processing Speed. For cafes managers this new equipment Means Access to a wide sanely of retail data on an almost daily basis. For customers paying through their App account credit card or personal Check it equates to faster service. In the 26 major exchanges in Germany equipped with retail Point of Sale Cash registers or scanners customers now can gel their App purchases As Well As credit cards and personal checks approved Al the Reg ister via the computer. This is the Tig Benefit to the customer Thompson said. In the other exchanges customers still must have i hair App purchases posted at the App counters. App began in Europe 10 years ago As a lest authorised by inc House armed services committee. The idea was aimed Al helping soldiers overseas Deal Wilh a weak Dollar. Exchanges Al Giessen Augsburg Baum Holder and Hahn a were among the Sites chosen for yearlong test and were the first to become mechanized alter the program was approved Tor adoption at All overseas locations. As the program matured and expanded and As More service members began to use it numerous changes were made. In the Early Days each Purchase was separate and distinct contract. Later an open ended contractual concept was adopted with each customer Given a line of credit with an upper limit based on pay Grade. We found that administratively burdensome in a manual environment so it was changed to $1,000 across the Board Thompson said. About a year later following a determination that most of uie delinquent payment problems came from those in grades e-4 and below the graduated line of credit again was adopted. Except for raising the ceiling twice the concept of the program has changed Little since. What has changed is the technology. App was a hit from the Start with increasing num Bers of soldiers and airmen signing up for the Only credit program available Al the exchanges. However the number of accounts peaked in 1984 and has remained fairly stable since. There Are now about 123,000 account said cafes Europe comptroller Loyd Lee. One noticeable change Wilh inc Central App concept and the new computer network is a slight increase in the number of delinquent accounts. Lee said. Bul that s simply because files Are being processed much quicker he said. It is not by any Means alarm Bottom line losses on App accounts Are below i percent of sales he said. What did not cause a noticeable change in inc pro Gram s popularity was the Start of credit card acceptance at european exchanges in july 1986. Credit cards had no appreciable Impact on either numbers of accounts or receivable balance Lee said. Officials generally have attributed the continued Sta ble use of the App program 10 its lower interest Rales when compared to that charged by most credit car companies. The App finance charge is i percent per month or 12 percent annually which is lower than most major credit cards. A special App for military uniform purchases started in 1984 with a s200 ceiling is interest free tax wary w. German investors Moke Mark with foreign deposits by Michael Parr Bonn West Germany not worried about having interest on their savings taxed at the source West germans have joined foreign investors in a significant exodus out of Deutsche Mark deposits. Their concern has been prompted by the Bonn government s plan to impose a 10 percent withholding Taxon interest derived from Domestic Mark savings Start ing Jan. I. Although West germans already Are liable to a 10 percent lax on such interest Many of them do not declare it As income. The new withholding provision is an attempt to catch up Wilh he lax evaders. The combination of higher interest rates in other currencies notably the Dollar and the government s planned policy has caused a record net capital outflow this year of almost 60 billion Marks or about $32billion, said Carl Otto Pohl president of West Ger Many s a chiral Bank the Bundesbank. This is in contrast to an inflow during the first six months in 1987 of 19billion Marks about s10 billion. The flight of capital caused by the withholding provi Sion has helped drag Down the Mart. To compensate the Bundesbank has been forced to increase interest rates. In turn economists said these increases threaten to slow economic growth just As it shows signs of picking up. Pohl is among those who have expressed concern about the outflow especially its weakening effect on the value of the Mark. The Bundesbank and commercial Banks have tried unsuccessfully to dissuade Bonn from introducing the withholding tax on the ground that the effects of the investors negative View of it would far outweigh the 3.5 billion Marks about $2 billion of extra Revenue that the government Hopes to gain by tightening its tax collection system. Bul finance minister Gerhard Stoltenburg insists that the withholding measure will go into effect. At a news conference recently p5ht said inc fears the a chiral Bank had expressed Over the withholding tax s detrimental effect on the value of the Mark had been clearly exceeded the capital outflow in his opinion had reached a Point where it was dragging Down the Mark and Raisin the spec Leroy imported inflation. He pointed out that in the past seven months the Mark fell 16 percent in value in relation to the Dollar and 4 percent against the currencies of West Ger Many s 14 most important trading partners. Such a depreciation was nol justified by fundamental eco nomic data he said. Commercial Bankers have been particularly concerned that the withholding lax will make West Ger Many and Frankfurt its banking Hub leu air Active Asa financial Center driving foreign and Domestic investors elsewhere. Luxembourg in particular has benefited from the outflow. In the first Quarter of this year. West German savers made deposits there totalling 2.8 billion Marks about 11.3 billion compared with less than $128 Mil lion in the final Quarter of 1987. "1 feel like offering the West German finance min ister a Case of said one Luxembourg the first six Monlai of this year there was a surge of deposits in specially established Luxembourg invest men funds to 6.3 billion Marks $3.4 billion or More than 10 limes the Money placed in Domestic securities. The Bundesbank has described demand for the new investment funds which arc managed by the Luxem Bourg affiliates of West German Banks As
