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Greenback reaches highest mark in close to two years
By Molly Seltzer |
March 9, 2009, Monday
|
Print Edition
Print Edition
THE United States dollar reached its highest mark against the currencies of six US trading partners since April 2006 as investors sought safety after American International Group Inc got more government support and Federal Reserve Chairman Ben S. Bernanke said that the banking system isn't yet stabilized.
Japan's currency declined for a sixth week against the dollar, the longest losing streak since June 2007, amid concern the nation's recession will deepen. The dollar pared gains last Friday on speculation US job losses began to level off in February, encouraging some demand for higher-yielding assets.
"We saw a bounce in risk appetite late this week but if the dollar was truly out of favor you'd see the dollar selling against the euro and also the yen," said Michael Woolfolk, a senior currency strategist at Bank of New York Mellon Corp. "That hasn't happened. The safe-haven status of the dollar is unassailable."
The US currency rose 0.1 percent to US$1.2653 per euro from US$1.2669 on February 27. The yen declined 0.7 percent to 98.25 per dollar this week from 97.57. Japan's currency lost 0.6 percent to 124.34 per euro from 123.61.
The Dollar Index, which the IntercontinentalExchange uses to track the greenback's performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, increased to 89.624 on March 4, the highest level since April 2006, before ending the week up 0.6 percent, Bloomberg News said.
The pound fell for a second week against the dollar, dropping 1.6 percent to US$1.4094 as the Bank of England said that it will pump cash into the economy by purchasing as much as 150 billion pounds (US$211 billion) in government and corporate bonds, a policy known as quantitative easing. The Bank of England's main rate was cut to 0.5 percent, the lowest level since the bank was founded in 1694.
Sterling depreciated 27 percent against the dollar and 23 percent versus the euro last year as the economy faced its first recession since 1991.
"A move by the Bank of England to implement quantitative easing should over time add to the downward pressure on the pound," wrote strategists from Deutsche Bank AG, the world's largest currency trader.
Japan's currency declined for a sixth week against the dollar, the longest losing streak since June 2007, amid concern the nation's recession will deepen. The dollar pared gains last Friday on speculation US job losses began to level off in February, encouraging some demand for higher-yielding assets.
"We saw a bounce in risk appetite late this week but if the dollar was truly out of favor you'd see the dollar selling against the euro and also the yen," said Michael Woolfolk, a senior currency strategist at Bank of New York Mellon Corp. "That hasn't happened. The safe-haven status of the dollar is unassailable."
The US currency rose 0.1 percent to US$1.2653 per euro from US$1.2669 on February 27. The yen declined 0.7 percent to 98.25 per dollar this week from 97.57. Japan's currency lost 0.6 percent to 124.34 per euro from 123.61.
The Dollar Index, which the IntercontinentalExchange uses to track the greenback's performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, increased to 89.624 on March 4, the highest level since April 2006, before ending the week up 0.6 percent, Bloomberg News said.
The pound fell for a second week against the dollar, dropping 1.6 percent to US$1.4094 as the Bank of England said that it will pump cash into the economy by purchasing as much as 150 billion pounds (US$211 billion) in government and corporate bonds, a policy known as quantitative easing. The Bank of England's main rate was cut to 0.5 percent, the lowest level since the bank was founded in 1694.
Sterling depreciated 27 percent against the dollar and 23 percent versus the euro last year as the economy faced its first recession since 1991.
"A move by the Bank of England to implement quantitative easing should over time add to the downward pressure on the pound," wrote strategists from Deutsche Bank AG, the world's largest currency trader.
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