The dollar dropped against most of its major counterparts as China’s interest-rate increases failed to quell investors’ appetite for higher-yielding assets.
The euro rose against 13 of its 16 most-traded peers as signs of normality in Egypt’s financial market damped concern that unrest in the region would intensify. New Zealand’s dollar, Brazil’s real and South Africa’s rand, currencies that are tied to global growth, were the top performers. Sterling dropped after the U.K. increased a levy on bank balance sheets.
“The move by the Chinese was fairly expected, and the currency market is pretty unfazed and is taking it in stride so far,” said Fabian Eliasson, head of U.S. currency sales at Mizuho Financial Group Inc. in New York. “The euro is up from yesterday as you’re seeing a calmer situation in Egypt, and that’s certainly helping the euro. The overall global situation is better.”
The dollar depreciated 0.5 percent to $1.3644 per euro at 10:38 a.m. in New York, from $1.3583 yesterday. The yen declined 0.2 percent to 111.99 versus the euro, from 111.82. The dollar fell 0.3 percent to 82.08 yen, from 82.33.
Brazil’s real gained as much as 0.7 percent to 1.6683 per U.S. dollar, the most in a week on an intraday basis. New Zealand’s dollar appreciated 0.9 percent to 77.70 U.S. cents.
The Australian dollar fell versus 8 of its 16 peers after China, the nation’s biggest trade partner raised rates for the third time since mid-October before data forecast to show accelerating inflation. The benchmark one-year lending rate will increase to 6.06 percent from 5.81 percent, effective tomorrow, the People’s Bank of China said on its website today. The one- year deposit rate will rise to 3 percent, from 2.75 percent.
Egyptian Pound
The Egyptian pound strengthened the most against the dollar since November as the central bank intervened to support it, according to Deputy Governor Hisham Ramez.
Egypt’s currency strengthened 1.3 percent to 5.8780 against the U.S. dollar. The central bank intervened in financial markets today, buying pounds to halt the decline of the currency. Earlier the Egyptian pound declined to a six-year low of 5.9615.
Egyptian Vice President Omar Suleiman said a committee on constitutional changes will start work today as the government seeks to convince protesters that it’s serious about moving toward democracy.
German Output Falls
The euro remained higher versus the dollar even after the Economy Ministry in Berlin reported that German’s industrial production unexpectedly contracted in December as cold weather caused construction to slump. Output fell 1.5 percent, compared with a median forecast for a 0.2 percent gain.
“News that should have been negative for the euro has not been so today,” said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co. in New York. “The overall direction today will be driven by the mood in equities.”
Stocks fluctuated, with the MSCI World Index gaining 0.3 percent and the Standard & Poor’s 500 Index up 0.1 percent.
IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, decreased 0.3 percent to 77.823.
South Korea’s won strengthened 0.3 percent to 1,104.68 per dollar as economists in a Bloomberg News survey forecast the Bank of Korea will boost the seven-day repurchase rate by 25 basis points to 3 percent at its meeting this week. President Lee Myung Bak declared last month “war” on inflation, saying it must be contained to protect people on low incomes.
‘Demand for Euros’
“Asian currencies have continued to rally and central banks continue to intervene and stem the appreciation and that in turn is leading to demand for euros,” said Paresh Upadhyaya, head of Americas G-10 currency strategy at Bank of America Corp. in New York. “The lack of macroeconomic data in the U.S. is going to make it hard to derail this euro movement today.”
Federal Reserve Bank of Richmond President Jeffrey Lacker said a quickening U.S. recovery means policy makers need to take “quite seriously” their commitment to review a $600 billion monetary-stimulus program scheduled to end in June.
Higher consumer spending, along with business investment in equipment and software, point to U.S. growth this year of “pretty close to 4 percent,” Lacker said today in a speech in Newark, Delaware.
Fed Chairman Ben S. Bernanke testifies tomorrow at a hearing of the House Budget Committee.
Sweden’s krona strengthened for a second day against the dollar and touched a 10-year high versus the euro on speculation global growth will spur demand for the Nordic nation’s assets. The currency gained 0.5 percent to 6.4300 per dollar. It was little changed at 8.7793 per euro after appreciating to 8.7642, the strongest level since December 2000.
The pound fell against most major counterparts as U.K. Chancellor of the Exchequer George Osborne increased a tax on banks’ balance sheets to raise an extra 800 million pounds ($1.3 billion) as he continues to negotiate lending targets and curbs on pay.
Sterling dropped 0.3 percent to $1.6056 and depreciated 0.8 percent to 85.02 pence per euro.
Source: http://www.businessweek.com
No comments:
Post a Comment