Dollar declines as investors reassured by new global banking rules, growing Chinese economy

New banking rules, growth in China weigh on dollar

NEW YORK — New global banking regulations and signs that growth in China is picking up — assuaging fears of a steep slowdown in the world’s No. 2 economy — weighed on the dollar Monday as investors sought out riskier bets that could yield bigger returns.

The euro, used in 16 European countries, gained to $1.2867 in late trading in New York, up from $1.2718 late Friday. The British pound rose to $1.5408 from $1.5354. The dollar dropped to 83.63 Japanese yen from 84.15 yen, not far off a 15-year low of 83.35 yen hit last week.

While the dollar faltered, stock markets in the U.S. and overseas got a boost Monday after global banking regulators agreed over the weekend to raise capital requirements for lenders. Investors were relieved that the new rules, which are designed to strengthen bank finances and rein in the excessive risk-taking that caused the financial crisis, would not be fully enforced until 2019.

There had been concerns that European banks would have a difficult time complying with strict new rules on higher capital reserves in the near future.

Traders tend to buy the dollar, along with currencies considered safe havens such as the yen and Swiss franc, when economic data suggests that growth is slowing down worldwide, or investors are uncertain about the impact of new regulations.

The dollar also slid Monday versus currencies of countries that are big commodity exporters, such as the Canadian, Australian and New Zealand dollars.

Data released over the weekend in China, a major importer of raw materials, helped bolster these currencies. The reports suggested the Chinese economy grew briskly in August. Bank lending increased, as did industrial production and retail sales.

“The data helps strengthen views that (the) slowdown in the Chinese economy was largely shallow,” said Brown Brothers Harriman analysts in a note to investors.

The dollar fell to 1.0271 Canadian dollars from 1.0354 Canadian dollars. In other trading Monday in New York, the dollar slid to 1.0085 Swiss francs from 1.0192 Swiss francs and was also lower versus the Mexican peso, Scandinavian currencies and many currencies of Asia’s developing economies.