Sun, Jul 03, 2016 - Page 14 News List

Euro rises against dollar, pound extends slide

AFP, NEW YORK

The euro on Friday leaped against the US dollar as the market continued to rebound from Brexit slumps, while the pound resumed its slide following Bank of England hints of credit easing.

“What a difference a week makes,” BK Asset Management’s Kathy Lien said. “The market went from preparing for another financial Armageddon post-Brexit to wondering if the worst is over.”

The euro found support from improved labor data as unemployment fell to a near five-year low in May in the struggling single-currency bloc.

The euro jumped 3.1 percent to US$1.1138.

“It was a good week for the euro, which, like many other major currencies, bounced off its Brexit lows,” Lien said. “However, now that the Bank of England opened the conversation about more easing, the European Central Bank could be next.”

Meanwhile, the pound dived 3.5 percent against the greenback to US$1.3267.

“The latest leg lower in the pound came after Bank of England Governor Mark Carney said yesterday that monetary support for the post-Brexit economy was likely and that acting sooner rather than later was merited,” Commonwealth Foreign Exchange’s Omer Esiner said.

Noting that US markets would be closed tomorrow for a holiday, Lien said investors would be closely following the dollar in the coming week.

The key calendar events are the minutes of the last US Federal Reserve monetary policy meeting on Wednesday and the jobs report for last month on Friday.

The US dollar on Friday fell against the New Taiwan dollar, shedding NT$0.068 to close at NT$32.218 as traders in Taiwan were encouraged by the strength of other regional markets to push down the US currency, dealers said.

Aggressive buying by foreign institutional investors in Taiwan’s stock market also contributed to the slide of the US dollar, which fell against the NT dollar in Taipei for the fourth consecutive session, they said.

For the week, the US dollar fell 0.88 percent against the NT dollar to dip to its lowest since June 23, when the US unit closed at NT$32.190.

The greenback on Friday opened at NT$32.250 and moved between NT$32.172 and NT$32.320 before the close. Turnover totaled US$1.132 billion.

The US dollar faced selling soon after the foreign exchange market opened following further foreign fund inflows into the region, boosting regional currencies, they said.

The won, which the NT dollar traces closely, gained almost 0.6 percent against the US dollar at one point, giving a strong hint to traders to pick up the NT dollar and drag down the greenback, they said.

Strong foreign institutional buying in the stock market triggered more selling of the US dollar throughout the session, dealers said.

According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$12.39 billion (US$384.6 million) in shares in the nation’s main bourse, helping push the weighted index up 0.83 percent at the close on Friday.

Additional reporting by staff writer, with CNA

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