Home / World Business
Sun, Jan 25, 2009 - Page 10 News List

Dollar climbs to near 24-year-high against pound

LOSS OF APPETITE: Asian currencies declined last week as evidence of a deepening global financial crisis prompted investors to cut holdings on regional assets

AP AND BLOOMBERG , NEW YORK

The US dollar notched a new 23-and-a-half-year high against the pound and gained on the euro, but slipped versus the yen as a British recession was confirmed and more bluechips posted declining profits.

The 16-nation euro fell to US$1.2974 in late trading on Friday from US$1.3021 late on Thursday.

The British pound traded at US$1.3768, having rallied moderately after earlier sinking to a 23-and-a-half-year low of US$1.3501 after the British government confirmed a second consecutive quarter of economic contraction. Thursday, the pound was worth US$1.3876.

A standard definition of recession is two quarters of shrinking economic activity.

Analysts see more interest-rate cuts coming from the Bank of England, which could help support the dollar.

Cutting rates theoretically gives a boost to economic activity, but can undermine a currency as investors transfer funds elsewhere for better returns.

Meanwhile, the greenback slipped to ¥88.76 from ¥89.09 late on Thursday.

The US, Japan and Germany, Europe’s biggest economy, are already officially in recession.

In the US, market sentiment was poor as a string of brand-name corporations reported shrinking profits.

In other New York trading, the dollar rose to 1.1568 Swiss francs from SF$1.1541 late on Thursday, but dropped to 1.2340 Canadian dollars from C$1.2532.

Asian currencies declined last week, led by the South Korean won and Indonesian rupiah, as evidence of a deepening global recession prompted investors to cut holdings of emerging-market assets.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks 10 Asian currencies, fell for a fifth week, the longest run of losses since September.

South Korea on Friday said its economy shrank by the most since the 1997 to 1998 financial crisis, while China reported the slowest growth in seven years.

Singapore warned of a prolonged recession and global funds sold more stocks than they bought last week in India, South Korea and Taiwan.

“Risk appetite has definitely waned,” said Callum Henderson, head of global currency strategy at Standard Chartered Plc in Singapore.

“The economic outlook remains relatively poor, and growth expectations continue to be revised down. The bias for much of the first half will be lower for Asian currencies,” he said.

The won weakened 2.4 percent to 1,390.90 per dollar last week, according to Seoul Money Brokerage Services Ltd.

The rupiah lost 2.3 percent to 11,365 and the NT dollar dropped 0.7 percent to NT$33.597. India’s rupee fell 0.9 percent to 49.2125.

The Asia Dollar Index dropped 0.8 percent last week, extending its decline for the month to 2.6 percent.

The MSCI Asia-Pacific Index of shares excluding Japan slumped 6.4 percent last week.

Indonesia’s rupiah traded near the lowest level in five weeks as the Jakarta Composite Index of shares slumped. Bank Indonesia Governor Boediono said on Friday the central bank is always in the market to support the rupiah.

Malaysia’s ringgit fell for a third week on speculation a prolonged global recession will prompt the central bank to keep cutting interest rates.

The ringgit fell 1.4 percent to 3.6248 per dollar last week in Kuala Lumpur.

The Philippine peso slipped 0.4 percent to 47.400 per dollar this week and the Singapore dollar lost 1.3 percent to S$1.5067.

The Thai baht and the Vietnamese dong were little changed at 17,477.00 and 34.89 respectively.

This story has been viewed 1713 times.
TOP top