CURRENCIES: Dollar Slumps Versus Euro As Gold Futures Soar
By Lisa Twaronite
The dollar gained slightly on the yen but retreated against the euro in
Asian-hours trading Monday, as soaring gold futures pressured the greenback
against its European counterpart.
The dollar bought 90.06 yen, up from 89.88 yen in late North American trade
Friday, while the euro rose to $1.4940, up from $1.4840
Gold futures climbed to new heights in electronic trading in Asia, with the
most-active December contract tapping an intraday high of $1,105 an ounce, as
the market extended gains from Friday's record New York finish.
At the weekend meeting in Scotland of finance ministers and central bankers
from the Group of 20 leading economic powers, attendees agreed to keep massive
stimulus measures in place until the global recovery strengthens.
In a report to the G20, the International Monetary Fund cited signs that the
dollar is being used as a funding currency for carry trades, which involve
borrowing funds denominated in lower-interest currencies -- such as the dollar
and yen -- and investing in higher-yielding assets denominated in other
currencies.
"These trades may be contributing to upward pressure on the euro and some
emerging-economy currencies," the IMF said. "The euro has experienced most
appreciation among major advanced economy currencies and remains on the strong
side of its equilibrium."
On Friday, the dollar had edged lower against the yen and traded nearly flat
against the euro, after a surprise jump in the U.S. jobless rate to more than
10% comforted views the Federal Reserve will stick to a loose monetary policy.
(END) Dow Jones Newswires
11-09-090209ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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