Sun, Nov 28, 2010 - Page 10 News List

Greenback gains most on big rivals in three months

Staff writer, with Bloomberg

The US dollar gained the most since August against six major counterparts as concern that Europe’s debt problem will worsen and military action in Korea will escalate boosted demand for the US currency as a refuge.

The greenback rose against the yen for a fourth straight week, the longest streak in 20 months, after North Korea shelled a South Korean island and said “escalated confrontation” will lead to war. The euro fell for a third week versus the greenback as investors speculated Portugal and Spain would be the next European countries to need a financial rescue.

“The euro has further to fall against the dollar,” said Kathy Lien, director of currency research at online currency trader GFT Forex in New York. “If there is a war amongst the Koreas, the yen would fall off aggressively against the dollar.”

The euro tumbled 3.2 percent to US$1.3242, from US$1.3673 on Nov. 19. The three-week decline was its longest since May.

The currency has lost 5.1 percent this month. It slid 2.5 percent against the yen to ¥111.37, from ¥114.23 last week.

The greenback rose 0.7 percent against the yen to ¥84.10, from ¥83.55. It was the fourth weekly gain, the longest winning streak since the six weeks ended March 6, last year.

The yen was poised for a 4.4 percent monthly loss versus the dollar, weakening from 15-year highs it reached last month.

The pound posted its biggest weekly drop against the dollar in more than six months as concern that China is moving to slow its economy and tensions between North and South Korea diminished demand for riskier assets.

The pound dropped to US$1.5602 as of 4:30pm in London on Friday, a weekly decline of 2.4 percent. Sterling gained 0.9 percent versus the euro to £0.8482.

KOREAN TENSIONS

Asian currencies had their biggest weekly loss in six months because of heightened tensions on the Korean Peninsula.

The Bloomberg-JPMorgan Asia Dollar Index slid for a third week, its longest losing streak since February.

The South Korean won fell 2.2 percent this week to 1,159.63 per dollar in Seoul, its biggest loss in five months, according to data compiled by Bloomberg. Singapore’s dollar dropped 1.9 percent to S$1.3208, the steepest slide since February last year. China’s yuan declined 0.42 percent to 6.6675 per US dollar, its biggest loss since December 2008.

The New Taiwan dollar surrendered weekly gains in the last minute of trading on Friday on speculation the central bank intervened to check appreciation that may hurt exporters, according to two traders who declined to be identified.

The NT dollar rose as much as 1.3 percent earlier after better-than-forecast economic data spurred global funds to add to holdings of Taiwanese shares. The jobless rate was 4.96 percent last month, compared with the median prediction of 5.04 percent by economists in a Bloomberg survey, the government said on Monday.

“The rising trend of the Taiwan dollar is not going to change in the near term because economic growth is quite strong,” said Henry Lin, a Taipei-based foreign-exchange trader at Shin Kong Commercial Bank (新光銀行). “The central bank will continue its efforts to slow the currency’s gain.”

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