Dollar slides versus euro after Japan’s currency intervention but holds onto gains against yen
By APThursday, September 16, 2010
Dollar slides vs euro after Japanese intervention
NEW YORK — The euro hit a five-week high Thursday in a sign that the Bank of Japan’s intervention to lower the yen’s value against the dollar is having repercussions beyond the U.S. currency.
Japan’s defense of its currency has curbed the yen’s gains versus the dollar, at least for now. To bet against the dollar Thursday, traders instead turned to the euro, analysts said.
Speculation that the Federal Reserve will begin buying U.S. government bonds to further drive down interest rates has weighed on the dollar this summer. Brown Brothers Harriman analysts said the prospect of the Fed actions were likely to continue to drag on the dollar against the euro.
In late afternoon trading Thursday in New York, the euro, used by 16 European countries, rose to $1.3080 from $1.3006 late Wednesday. It peaked earlier in the day at $1.3117, the first time the common currency has moved above $1.31 since Aug. 11.
The dollar held on to Wednesday’s sharp gains on the Japanese yen, trading at 85.78 yen from 85.62 yen. Wednesday’s increase was the biggest one-day dollar gain since the depths of the financial crisis two years ago.
Despite the dollar’s gains over the past two days, the yen has still risen more than 8 percent this year. It is uncertain how successful Japan’s intervention efforts will be in the long term.
Worries about the U.S. economy had helped drive then Japanese currency to its most recent 15-year high of 82.88 yen late Tuesday in New York, before Japan’s intervention.
In other trading Thursday, the British pound edged up to $1.5640 from $1.5620, while the dollar slipped to 1.0270 Canadian dollars from 1.0277 Canadian dollars.
The dollar surged to 1.0146 Swiss francs from 1.0038 Swiss francs, and also hit a record high versus the Chinese yuan Thursday for the fifth straight trading day. China is allowing the yuan to appreciate as the Obama administration criticizes China’s foreign exchange policy and signals that it will get tougher with the world’s No. 2 economy on trade issues.
Tags: Asia, Dollar, East Asia, Japan, New York, North America, United States