European Stars And Stripes (Newspaper) - February 5, 1989, Darmstadt, Hesse                                Page 18 the stars and stripes business news Buck expected to continue rising higher Strong demand for the Dollar continued to move the Greenback higher on world currency markets last week and barring unforeseen developments the Buck should continue to move higher in the week ahead. The trend is still up and it is Well possible that the Dollar will climb to 1.90 against the Mark said Yvan Weill foreign Exchange manager with Mer chants National Bank in Frankfurt. At midday Friday the Dollar was trading inthe neighbourhood of 1.88 Marks its highest level in four months. It started the week around 1.8580. The military Exchange rate also move Dup three pfennig for the week from 1.83 Marks monday to 1.86 Marks per Dollar at the fix Friday. The latter rate will apply to military banking transactions through monday. Against the British Pound the Buck was in the neighbourhood of $1.75 at week s end slightly stronger than the $1.76 rate at which it started the week. Currency traders heartened by their Success a moving the Dollar higher the past two weeks said they plan to continue testing the upper end of the Road trading Range considered acceptable by the by Randy Mcclain world s Central Banks. Accepted Wisdom is that the Central Banks Are willing to see the Dollar Between 1.70 and 1.90 Marks although the Banks have never publicly confirmed those figures. And the Banks weren t doing much talking Friday either even though the seven largest and most influential economic Powers were Alunder one roof for a meeting of the so called group of seven in Washington. Represented atthe meeting were the United states Japan West Germany France Britain Italy and Canada. Foreign Exchange traders were watching the meeting closely for hints of any new strategy on intervention designed to Stop the Dollar s rally or for signs of disagreement among g-7 members. But As of midday Friday the participants had no issued a communique describing their talks. Another item watched closely by foreign Exchange Market makers was the release of Jan uary s unemployment data and Job growth Fig ures for the United states. Unemployment edged up to 5.4 percent from5.3 percent the month before the labor department said Friday but Job growth skyrocketed lending support to those who say the Amer ican Economy is still in danger of overheating. The labor department reported 408,000 Job were created in january 260,000 of them in the services sector. Economists had speculate prior to the report s release that Only 250,000 new jobs would materialize. Tim Fox economist with Barclays Bank i London said any Job growth above 250,000 could Spur the Dollar to new highs. His reasoning More jobs Lead to More spending by americans and that fuels inflation. With inflation on the Rise the Federal Reserve is Likely to boost interest rates even further to rein in the Economy and that attracts private investors an businesses to Dollar denominated investments. Fox said one question Mark is How fiercely euro Pean Central Banks will defend their own currencies in the face of a further Rise in the Buck. But the Only Way to find out will be to test the upside he said. Weill of merchants Bank said traders Bent on pushing the Dollar higher might be Able to win afew More rounds against the Central Banks. We have seen that intervention did t Stop the trend up Weil said. It worked Only for a few hours or  he said history might repeat itself Over the next few Days. The stars and stripes 2 credit unions cry foul Over merchants cd Sale by Randy Mcclain financial writer two of the biggest credit unions in West German lost More than $2 million in deposits to merchants National Bank during the Bank s four Day special on certificates of Deposit late last month and the credit unions Are screaming foul. I m angered said Richard e. Tolle marketing manager for service Federal credit Union in Kaiserslautern which lost several Hundred thousand Dollar Between Jan. 26 and Jan. 30 when customers withdrew their funds drove across town and bought cd a merchants to take advantage of interest rates As High As 9.625 percent. Those rates Are More than 1.25 percentage Point higher than the average being offered on cd at Finan Cial institutions in the United states. If they keep on doing this Well be  s my fear Tolle said. Service Federal can t match such High rates handstands to lose More business if merchants keeps up its assault he said. Service Federal can t compete at those rates said Gordon Simmons director of operations in Europe. He labelled merchants strategy unfair  another credit Union that came out on the losing end was Andrews Federal credit Union headquartered in Frankfurt. Senior vice president Henry Addi son said his institution lost $1.5 million in deposits to merchants during the Bank s cd Sale. Some credit unions in West Germany Are so upset with merchants High interest rate tactics that they reconsidering filing a complaint with the department of defense to prevent future sales the stars and stripes has Learned. Well use the channels available to us to try to prevent this sort of thing from happening again said one credit Union official who spoke on the condition that his name not be used. I m not sure How Well make  merchants National Bank in t saying How much Money it took in during its Brief cd push but Genera manager Robert j. Schindler said his Bank did t do anything wrong. He said the four Day Sale held at ban branches in West Germany Greece and the nether lands was extremely  Schindler said the High rates offered by merchants illustrate that banking overseas is becoming More competitive than it has been. Still Schindler said the no. 1 goal of the cd Sale was to persuade service members to move More of their savings into merchants from stateside Bank accounts not to raid credit Union coffers. We appreciate that some Money will flow into us from local credit unions but our preliminary figures show that less than 10 percent of the Money. Came from that source Schindler said. No doubt that modest figure is Why not All credit unions Are  however some credit Union executives see thing differently. If the government allows merchants to go on rampage we be got real trouble said Tolle of service Federal. He and others said merchants amounts to government subsidized Competition because it holds a Cost plus contract to provide banking services Over seas. If the Bank does t make a profit the government covers the loss. Several credit Union officials said the think merchants is taking advantage of that status. The Bank is offering top rates but Schindler said merchants makes a profit on its specials. The cd rates offered by merchants in late january and once before during a similar one Day Sale in Early december either matched or surpassed the highest rates now offered on cd in the United states. According to Bank rate Monitor a North Palm Beach fla., Trade Magazine the current average yield for a six month cd in the states is 8.33 percent. Mer chants offered rates ranging from 8 percent for a$1,000 investment to 9.5 percent for a $50,000 invest ment Over six months. The current average yield Back Home for a 12-month cd is 8.58 percent. Merchants offered interest rate ranging from 8.25 percent for a $1,000 investment to 9.625 percent for a $50,000 investment held one year. The highest yielding six month cd offered any where in the states can be found at Virginia Beac Federal savings Bank Virginia Beach a. It provides a 9.57 percent interest rate according to 100 highest yields Magazine. The Best 12-month cd yields 9.65 percent interest. It is offered by the Middlesex saving Bank in Massachusetts. Cd rate comparison . Average six month 8.33% one year 8.58% five year 8.79% merchants Community Bank 9.25% 9.375% not offered rates shown were offered by merchants Community Bank Jan. 26-30. Specific rates listed above were paid on $10,000 certificates of Deposit. Smaller investments had slightly lower yields larger ones had slightly larger yields. A few credit Union officials in West Germany suspect merchants intends to continue to stage periodic raids on their deposits despite recent claims to the contrary by the Bank s general manager. There s no doubt about it. Our Money is being targeted Tolle said. He and Simmons said their proof is an internal memo from merchants Headquarters to regional and Branch managers that stresses the need to attract new deposits from credit Union customers As Well As from accounts that service members Are maintaining state Side. The document fell into service Federal s hands after one of merchants Branch managers gave out co pies to his customers the executives said. Credit Union officials Haven t yet approached the department of defense with their complaints. Man officials believe it would be Wise for the dozen or so credit unions that operate overseas first to agree on joint course of action before making Waves. Tolle for one agreed with that idea. Credit unions May need to present a United front he said. Simmons said credit Union officials Likely will Dis cuss their problems with merchants at the annual con Ference of overseas credit unions to be held in Vienna Austria april 10-12. A lot will depend on How the other members feelab9ut this Simmons said. We can t have one credit Union going off on its  a complaint from a single financial institution probably would fall on deaf ears at the defense department he added but there could be strength in numbers. If merchants continues to try to attract deposits a higher than Market rates some credit Union officials believe savers would Benefit but borrowers would Bethe losers. Financial institutions that match the High rates would have to charge higher interest on Loans to break even. It would have an Impact on our loan policy overtime Simmons said. Prices would go up and riskier Loans to service members in the lower pay grades might become a thing of the past he said. Schindler of merchants however does t see any dire consequence resulting from the Bank s cd sales and he said the Bank probably would run More specials. If i had some stateside Money i would bring Stover Park it in a savings account and ask the Mer chants Branch to give me a Call if there is another Sale he said