Dollar falls on $10B Dubai bailout; euro higher despite anxiety over debt in euro nationsBy AP
Monday, December 14, 2009
Dollar falls as Dubai bailout eases credit worries
NEW YORK — Investors left the safe haven of the dollar Monday as Dubai’s $10 billion bailout eased worries over global credit problems, while the euro rose despite anxiety about government debt and credit in euro-zone nations Greece and Spain.
Stock markets around the world were mostly higher on news that Abu Dhabi is extending emergency funds to Dubai to help the Middle Eastern city-state stay afloat. Markets had been worried in recent weeks that debt problems in the struggling former boomtown could send ripples through global credit markets.
The 16-nation euro edged up to $1.4647 in late New York trading from $1.4617 Friday after Greece’s prime minister announced a barrage of spending cuts and warned that the country risked drowning in debt. The government has promised to step up efforts to reduce the deficit after a ratings agency downgraded the country’s debt rating. Also last week, a rating agency lowered the credit rating outlook for Spain to negative.
The euro dropped as low as $1.4587 Friday, its deepest level since early October, amid worries about the stability of government finances in European countries that use the euro.
“The euronow looks set to test down to $1.4480 … in the near term, as debt concerns among euro zone countries continue to weigh,” said Michael Hewson, a currency analyst at CMC Markets.
Meanwhile, the British pound rose to $1.6304 from $1.6241 late Friday, while the dollar slipped to 88.63 Japanese yen from 89.18 yen.
Also Monday, investors were encouraged by Exxon Mobil Corp.’s $29 billion purchase of XTO Energy and news that banking giant Citigroup Inc. will pay back $20 billion in bailout money it received as part of the government’s financial rescue program.
Markets await more details from the Federal Reserve, which wraps up its last policy meeting of the year on Wednesday. Investors expect the central bank to keep its benchmark interest rate at a historic low level of near zero for the time being, but there is some concern that rates could rise sooner than previously thought as the economy improves.
Higher interest rates — or the expectation of higher interest rates in the near future — can boost a currency as investors transfer their funds to where they can earn higher returns.
In other late trading Monday, the dollar fell to 1.0322 Swiss francs compared with 1.0341 francs Friday, and slipped to 1.0595 Canadian dollars from 1.0606.
Tags: Dollar, Dubai, Exxon mobil, Middle East, New York, North America, Ownership Changes, United Arab Emirates, United States, Xto energy