Dollars takes a beating
By IM on Jan 11, 2010 with Comments 0
The U.S. dollar weakened on Monday while currencies of India, China, Brazil, and Euro gained strength as analysts across the globe predicted that the emerging economies will recover sooner than the US economy from the worst recession in last sixty years.
Federal Reseves comments that the US interest rates may remain low for “quite some time,” also hurt the dollar today.
Positive global economic data point to a continuing recovery, which is benefiting the euro and commodity-backed and emerging-market currencies, and persistent troubles in the U.S. labor market weigh on the dollar.
The lagging U.S. jobs report is “mostly perceived as a dollar issue and not as a broad risk event,” especially when Chinese data reported overnight points to a strong recovery there, Sebastien Galy, currency strategist at BNP Paribas in New York told Dow Jones.
Monday morning in New York, the euro was at $1.4525 from $1.4414 late Friday, according to EBS via CQG. The dollar was at Y92.47 from Y92.59, while the euro was at Y134.33 from Y133.48. The U.K. pound was at $1.6158 from $1.6034. The dollar was at CHF1.0163 from CHF1.0237.
The Indian rupee also rose to its highest level in more than 15 months against the U.S. dollar, benefiting from the greenback’s global weakness and hopes of capital inflows into the strongly growing Indian economy.
The dollar was at INR45.34 late Monday after falling to INR45.28, last seen on Sept. 22, 2008. It was down from INR45.76 Friday.
“The rupee has rallied quite a bit. Technically, there should be a correction, but it would only be mild,” said the foreign exchange trading head at a large private bank.
The local currency has risen more than 6% since October as a strengthening economy and relatively higher interest rates lure foreign investors back. Foreign funds bought more than $17 billion of local shares in 2009 after having sold more than $13 billion of shares the year before.
A slew of initial share sales lined up mostly in February are likely to provide further strength to the local currency, the dealer added.
