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How long will blue-blooded greenback reign?

How long wilt thou rule, sire? The dollar is king of currencies and has had German marks, French francs, and the British pound (to name a few loyal subjects) bowing before it. Until last Friday, the blue-blooded greenback continued to topple records it's been setting for months.

In marked contrast to the uncertainty on Wall Street, European exchange traders seem solidly bullish on the American economy.

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For instance, when the third-quarter GNP flash estimate came out Thursday at a 3.6 percent annual growth rate, the stock market simply shrugged off the apparent letup in the economy. This diffident response came after weeks of pundits calling for a slower economic growth rate to push interest rates down and make stocks more competitive with bonds.

Overseas, meanwhile, the dollar shot up as the GNP flash was taken to mean the American economy had more vigor than expected.

For over a year now the strength of the dollar has baffled the experts. By all the normal indicators the dollar is overvalued, way overvalued. But when asked when it will it fall, they laugh, or groan, or simply roll their eyes.

Interest rates are the key, say some economists (sound familiar?). When interest rates come down, then the dollar will start behaving. Others are saying the US economy is the strongest in the world and overseas investors recognize that this is where the profits are being made.

On Friday those theories were tested as Morgan Guaranty Trust Company lowered its prime lending rate to 123/4 percent from the prevailing 13 percent level.

That move, it seems, and a $450 million sale by the West German central bank to support the mark, sent the dollar tumbling. The stock market also ended the week in a nosedive when no other banks followed Morgan Guaranty's lead. The Dow Jones industrial average closed at 1201.74, down 35.78 points in five sessions.

Despite the dollar's drop, the exchange rate remains quite high, even compared to a month ago. So there may yet be a savvy stock play off the dollar - perhaps in large foreign multinationals.

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''The major overseas exporting companies are doing fabulously well,'' says William Fink, vice-president of Fidelity's International Investment Advisors. For three years a strong dollar has made foreign products some 25 percent cheaper in this country, hurting domestic competitors but holding inflation in check.

Mr. Fink says brisk sales in the US have pushed up French food and wine stocks up. And Germany's Mercedes-Benz has chalked up luxurious profits on car sales here. ''The strong dollar has enabled Daimler-Benz to increase profit margins incredibly,'' said David Testa, president of T. Rowe Price's International Fund.

Another major US exporter is the Netherlands-based Philips NV. The electronics, communications, and lighting equipment giant has been a strong performer in the Kemper International Fund, says Gavin R. Dobson, fund president.

Canon Inc., the Japanese company that announced an agreement to make copiers for Kodak last week, has been another thoroughbred in the Kemper foreign stable.

While these are some of the individual standouts in international mutual funds, on the whole such funds have slipped. The strength of the dollar makes investing in foreign stocks an uphill battle for Americans. Every rise in foreign earnings is offset when making the exchange back to dollars.

William Fink at Fidelity uses Mercedes-Benz to illustrate the problem. ''Their stock has gone up about threefold in the last three years. At the same time, the deutsche mark fell 50 percent against the dollar.''

But there are some homegrown companies relatively untouched by the dollar that may be worth a look. At Salomon Brothers, research director Robert S. Salomon Jr. suggests ''domestic companies with the least international exposure - such as the newspaper industry.''

Why? ''When the dollar is overvalued, companies with an overseas exposure lose pricing flexibility (product prices are forced up). The newspaper industry is domestic, locally a monopoly in most cases, and still retains tremendous pricing flexibility of both the product and advertising,'' Mr. Salomon explains. He mentions Time Inc., the New York Times, and the Washington Post as investment possibilities.

Few care to prognosticate on the dollar now. But Fink, just back from London, is troubled by what he heard there. ''There's a lot of talk on the street, in restaurants, that the pound is going down to a dollar (at press time the pound stood at $1.25). ... At the tail end of a speculative boom you often hear that nothing can stop the rise,'' he says.

Gavin Dobson at Kemper suspects the US will endorse the IMF (at its annual conference this week), and push dollar up. ''But bull markets always end in a spike (upsurge). With this solid rise through the last few weeks, we're seeing a massive spike. In the short term I don't see it stopping - but there will be a drop.''

How far and how soon? Economists and exchange traders are silent. They've been wrong too often.Table -

Interest rates Percent Prime rate 13.00 Discount rate 9.00 Federal funds 11.06 3-mo. Treasury bills 10.73 6-mo. Treasurybills 11.06 7-yr. Treasury notes 12.54 30-yr. Treasury bonds 12.21

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