News @ AsiaOne

Dollar falls versus shaky euro

European currency remained vulnerable amid fears of spread of debt crisis. -AFP

Wed, Jun 09, 2010
AFP

NEW YORK - The US dollar fell Tuesday against the euro although the single European currency remained vulnerable amid fears a debt crisis in the continent could spread and wreck economic recovery.

The euro fetched 1.1967 dollars (S$1.6917)  in New York at 2100 GMT, up from 1.1919 dollars on Monday.

The European unit had shot past the 1.2000 dollar level from an overnight low of 1.1902 but failed to keep its momentum.

The dollar rose slightly against the Japanese currency, to 91.47 yen from 91.37 yen the previous day.

The market is concerned that the Greek budget crisis, at the epicenter of the European debt conundrum, could spread "like wildfire" and eurozone might slip back into recession by year-end, said analyst Michael Wright of Forex Capital Markets.

He said even though a Hungarian sovereign debt default was unlikely, comments by government officials last week had stirred market fears about such a possibility.

Hungary's Prime Minister Viktor Orban on Tuesday stepped into the budget slashing fray, unveiling public spending cuts amid concern on European and international markets that Hungary's situation was comparable to that of debt-stricken Greece.

Positive comments on the US economy by Federal Reserve Chairman Ben Bernanke also prodded investors to move out of the safety of the US dollar and into higher yielding and riskier currencies, said Kathy Lien, currency research director of Global Forex Trading.

Bernanke said late Monday that "there seems to be a good bit of momentum in consumer spending and investment" and "my best guess is we'll have continued recovery, but it won't feel terrific."

"For a central banker that has been consistently dovish, these words are extremely encouraging... ," Lien said.

Against other currencies, the dollar fell to 1.1520 Swiss francs from 1.1631 a day earlier while the British pound rose slightly to 1.4466 dollars from 1.4463.

 
 
 
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