European Stars And Stripes (Newspaper) - December 18, 1988, Darmstadt, Hesse Page 18 the stars and stripes business news Spunky Dollar jumps 2 pfennig As week ends the Dollar showed some spunk late last week jumping two pfennig Friday despite efforts by the West German Central Bank to keep it in Check with two different weapons in its financial Arsenal higher interest Rales and Dollar Selling on the open Market. Nevertheless foreign Exchange traders moved the Buck higher based largely on educated guess work that the Federal Reserve Bank will soon in crease its discount rate the Rale at which it Loans Money to other Banks from 6.5 percent to 7 percent to put the brakes on inflation in the United states and to keep Pace with key interest rate hikes in Europe by Randy Mcclaln the week s events amounted to a great Deal of technical jousting Between huge Central Banks on both sides of the Atlantic but at least it looks for now As if the Dollar has come out the Winner. The Buck was trading late Friday at 1.7555 Marks to the Dollar in Frankfurt West Germany an improvement of almost two pfennig from 24 hours earlier. Against the British Pound he Dollar was near si.82 for one Pound a slight improvement Over thursday s midday Rale of 1.s3. The military Exchange rate for West Germany was set Friday at 1.73 Marks to the Dollar. That rate will remain in effect at least through monday. Inflation was the key wont on the lips of Central Bankers and currency traders for much of last week. Bundesbank president Karl Otto Pishl announced thursday that the West German Centra Bank will increase a key interest rate at which it makes certain types of Loans to commercial Banks from 5 percent to 5.5 percent Pohl said he is tight ening the West German Money Supply to maintain worldwide Confidence in the Mark and to prevent inflation Cape Talionis from foreign Exchange traders interpreted the Bundesbank s move As Well As similar interest rate hikes at midweek by the Central Banks of France the Netherlands Austria and eddium As a preemptive strike designed to keep alow ceiling on the the trouble is currency markets did t behave the Way the Bundesbank would have liked. Instead of effectively capping the Dollar in he Low 1,70s, the Bundesbank s interest rate gambit Only served to fuel Market expectations thai a Federal Reserve discount Rale increase must be close at hand. Some currency traders were saying Friday though that the Dollar s Rise at week s end Actu ally might allow the fed to bide ils time a bit. "1 think in a Way they the fed s Board of governors can sit Back and enjoy this said Sandra Garraway an economist with Barclays Bank in London. Now the fed May be think ing if they Don t put the discount rate up right now it will give them one More thing to use in january should they need it.". Downward pressure on the Dollar is expected Boos the massive Trade and budget deficits. Currency traders Don t believe though thai this most recent rally signals a permanent up swing for the . I Sec a lower Dollar to help the . Trade deficit said Glinter Scicli. A foreign Exchange specialist with the Bank of Boston in Frankfurt. It s Clear the germans want to support he Mark and they want a ceiling on the Dollar below 1.75 Marks. But january Wilt show the real trend said another american banker in Frankfurt who spoke on the condition his name not be used. "1 Don t see a Heck of a lot happening Between now and the new year just plus or minus one Pfenning around 1.75." the banker added. The sur a 15li1pm y giving Mutual fund to child for Holiday in t child s play Buchet Currier a in siness writer new York. Beyond the customary toys and clothing what More thoughtful Holiday gift Tor a Young child or grandchild than shares in a Mutual fund it represents an investment in his or her future Hal stands to last longer than just about any consumer item. And through the Power of compounding a Small sum now might Well grow to a Large amount by the time the child reaches the expensive world of adult Hood. However worthy this idea might seem financial advisers say you should do a Little research and evaluation before you act on it when you Are dealing with children not your own a Niece say or the offspring of close friends they recommend that you Check first with the parents to see that you Don t unwillingly create i tax problem. West germans quietly repatriate Wii exiled Art by Carol j. Williams Bonn West Germany a quietly and unobtrusively West germans Are using limited amounts of Money to buy Back important Art works that left Ger Many during the nazi Era. Officials involved in the slow re acquisition of what germans Call their wandered culture decline to say How much they be spent to bring Home some historically important work. But at least 50 million Marks about $29 million most of it from the Federal and local governments is known to have been spent Over the past five years in the Effort that authorities have deliberately kept Low key. West Germany struggles with a particularly acute of exiled Art because of the volume of works sum by the nazi government during world War 11 to bankroll ils War Effort. In addition thousands of paintings manuscripts sculptures and other cultural goods were taken by jews and intellectuals hounded from their Homeland by Adolf Hitler s government but Only a fraction of the displaced Art made its Way Back to Germany after the War Ali arc was also a number of works created abroad by germans forced into Wile by the nazis that the nation now sees As part of its cultural heritage. We have no defined plan for buying up All the important Art work that have wandered out of the country Over the years but when the Opportunity arises we make our Best Effort to get Back what has been lost explained Hans Hieronymus who Heads the Interior ministry s office responsible for Art acquit Silins in an interview Hieronymus produced a list of the major works repatriated Over the past few months including three 16th-Century paintings by Albrycht purer original compositions of Richard Wagner and Robert Schumann Franz Kafka s 1920 manuscript of the trial and some personal letters and a i4fi3 edition of the apocalypse one of the earliest products of Johann Gutenberg s Block printing press. The most stunning indication of Bonn s commit ment to restoration of Germany s cultural heritage was the Purchase five years ago of the gospel of Henry the lion headed a Handwritten 552-Page 12th-Cen Tury volume that has commanded the highest Price to Date for a Book 32,5 million Marks or 519 million government Art appraiser Hartsul Vogl says the volume s Purchase was an inspiring Success for West German Art circles As it rewarded an unprecedented Effort of cooperation among sometimes fractious slate and Federal Art dealers and private cultural found. Lions. This was our masterpiece acquisition but for the most pan our funds arc too Small to achieve much headway Vogl said. True you can give anyone you choose As much As si0,000 per year without incurring a gift tax. But a child under 14 must pay taxes on unearned income including Mutual fund distributions that exceeds 1500 a year. What s More beyond $1,000 the income i taxed at the parents Rale. That warrants asking the parents whether the most appropriate Choice might be something that does t bring on a current tax obligation such As a fund or unit Trust that invests in municipal Bonds or perhaps an alternative like . Savings Bonds making an inquiry like this is especially important if the child s parents Are divorced or face some other financial complications. Aside from tax questions it makes sense to find out whether the particular Type of fund or other investment you have in mind tits with whatever other planning the parents Are doing forthe child s present and future. A separate potential problem arises from the fact that Many Long term Mutual funds declare capital gains distributions in december. If your timing is wrong when you make a fund Pur Chase you can Spring an unnecessary lax trap on the object of your intended largesse. Suppose a fund with a Seq a share net asset value sets a $2 distribution of dividends and capital gains for dec 23. For the next business Day on tuesday dec 27, the asset value will be reduced to so to reflect the you plan to invest shoo in a fund with no sales charge and specify automatic reinvestment of distributions it would t seem to make much difference which Day you made your Purchase. Either Way your gift goes to work with s500 won of shares. But if you buy before the distribution j100 of your gift will become taxable income to the recipient for this year with taxes due by mid april. If you buy after the distribution you avoid the Cost of the tax payment and the hassle that goes with it for whoever prepares the child s tax return. As a matter of general advice to anybody involved with Mutual funds Sheldon Jacobs publisher of the newsletter the no Load fund investor in Hastings on Hudson n.y., says do not buy any fund shares this month without carefully checking for forthcoming distributions. If you get caught you will pay taxes on profits you did t earn.". The sponsors of any fund Worth Downing should be willing to help you avoid this pitfall by responding readily to Telephone inquiries about their plans for Yea Rand distributions. Expert opinions mixed on Rote of slowdown London up an economist with one of Brit Ain s largest Banks says the world Economy is heading for a soft Landing a desirable slowdown after this Carv in sustainably rapid Rale of however David Kern head of Market intelligence at National Westminster Bank warned Hal the world could be heading for a recession unless the United Stales tackles its budget deficit problems. Our forecast of a soft Landing assumes that the . Administration adopts measures 10 curb the budget deficit and boost savings Kern warned last week. Failure to tackle the two deficits would result in financial upheaval and recession. Much depends on president elect George Bush reaching an understanding with a hostile Kern predicted economic growth would slow Down in 198? to 2 percent and to 1.7 percent in 1990. He forecast a similar slowdown for european economies but said Japan s Economy would continue to run Strong. ". He forecasts a weak Dollar through 1990, with sustained moderate improvement thereafter assuming the United Stales effectively tackles the budget deficit. Kern also expects . Interest Rales will Rise i per cent Over the next several months but will fall Back late in. 19s9 As the . Economy slows Down. In addition he said Oil prices will recover in 1989, but will remain weak until open demonstrates it can abide by the new production quotas it set at. A recent meeting in Vienna Austria. He said Oil prices should Rise from is per barrel in 1989 to 521 per barrel in 1994. A
