CURRENCIES: Euro Pushes Back Above $1.50; Vietnam Devalues
By William L. Watts
The dollar fell versus major rivals Wednesday, allowing the euro to again
fetch more than $1.50 as overall economic sentiment rebounded and the U.S.
Federal Reserve showed no qualms about the U.S. unit's decline.
Upbeat economic remarks by the Reserve Bank of Australia's deputy chief helped
stoke risk appetite, while the minutes of the Fed's Nov. 3-4 meeting released
Tuesday "seemed to tacitly endorse dollar weakness as long as it's orderly,"
said Daragh Maher, currency strategist at Calyon.
The euro traded at $1.5072, up from $1.4962 in North American trade late
Tuesday. The dollar fell to 87.69 yen versus the Japanese currency, down from
88.49 yen. The dollar notched a 10-month low versus the Japanese unit at 87.54
yen, according to FactSet.
The broadly weaker greenback also broke parity with the Swiss franc for the
first time since July 2008, dipping to a low of 0.9992 franc. In recent action,
the dollar fetched 1.007 francs, a loss of 0.8% on the day.
The dollar index (DXY), a measure of the U.S. unit against a trade-weighted
basket of major rivals, recently fell 0.7% to 74.548.
Remarks by Reserve Bank of Australia Deputy Gov. Ric Battellino contributed to
rising sentiment about global economic prospects, analysts said.
"With the economy having only recently entered a new upswing, it is reasonable
to assume that we will see this growth extended for a few more years yet,"
Battellino told an Australian housing conference, according to Dow Jones
Newswires.
That contributed to expectations the RBA will lift rates again in December,
boosting the Australian dollar while also lifting overall global risk appetite,
analysts said, contributing to dollar weakness.
Minutes of the Federal Reserve's Nov. 3-4 meeting released Tuesday also kept
pressure on the dollar, strategists said, reinforcing expectations U.S. interest
rate will remain low for some time.
The Australian dollar rose 0.9% to trade at 92.88 U.S. cents. The U.S. unit
declined 0.7% versus the New Zealand dollar to trade at NZ$1.3676.
The British pound rose 0.7% to trade at $1.6692 versus the dollar.
Sterling had little lasting reaction to an expected upward revision to third-
quarter British gross-domestic-product data. GDP shrank by 0.3% compared with
the previous quarter and falling 5.1% compared with the year-earlier period.
The Office for National Statistics had previously estimated a quarterly fall
of 0.4% and an annual decline of 5.2%.
The dollar's weakness helped fuel a rise in gold futures, which rose in
electronic trading on Globex. The December contract tapped a record above $1,
182, buoyed by investment demand and a report that India might be buying more
gold from the International Monetary Fund.
Vietnam's currency took center stage in Asian trade as the country's central
bank said it would again devalue the dong.
Vietnam's central bank said Wednesday it will devalue its currency by 5.4%,
effective Thursday, resetting the dollar-exchange rate to 17,961 dong from its
current level of 17,034 dong.
The move -- Vietnam's third devaluation in two years -- is an apparent attempt
to protect its foreign reserves. The State Bank of Vietnam will also narrow the
trading band of the dollar against the dong to 3% from 5%.
(END) Dow Jones Newswires
11-25-090755ET
Copyright (c) 2009 Dow Jones & Company, Inc.
|