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Sun, Apr 12, 2009 - Page 10 News List

Greenback appreciates against euro as crisis eases

BLOOMBERG

The US dollar posted the biggest weekly gain versus the euro in more than two months on optimism the worst of the financial crisis in the US is over.

The Dollar Index, which tracks the greenback against the currencies of six of its biggest trading partners, completed the largest weekly advance since November after Wells Fargo & Co’s profit beat estimates, triggering the steepest one-day gain on record in the Standard & Poor’s 500 Banks Index.

The euro dropped the most against the yen since January on concern the European Central Bank will cut its benchmark interest rate to below 1 percent to spur growth.

“Wells Fargo’s results augur well for US banks’ earnings and point to an easing in the financial crisis,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd, Japan’s largest currency broker. “The dollar is likely to be bought.”

The dollar climbed 2.3 percent this week to US$1.3143 per euro on Friday, the biggest gain since the five days through Jan. 23. It touched US$1.3090 on Friday, the strongest level since March 18.

The greenback strengthened 1.1 percent to US$1.4672 per pound and advanced 0.6 percent to 1,333 South Korean won.

The yen appreciated 2.3 percent to ¥132.18 per euro, the biggest gain since the week to Jan. 23. It was little changed against the dollar at ¥100.24 from ¥100.31 last Friday.

The New Taiwan dollar this week had its first weekly decline since February after the central bank reportedly stepped in to weaken the currency and help exporters weather a global recession.

The currency dropped 1.3 percent to NT$33.8 versus the US dollar this week, the worst performance among Asia’s 10 most-used currencies. Overseas sales, which are equivalent to about 70 percent of Taiwan’s GDP product, dropped for a seventh straight month last month, the government reported on Tuesday.

“Investors are worried it may take a long time for exports to recover,” said Henry Lin, a foreign-exchange trader at Shin Kong Commercial Bank (新光銀行) in Taipei. “Demand for dollars surged after the Taiwan dollar reached a three-month high this week.”

South Korea’s won, Indonesia’s rupiah and India’s rupee strengthened for a fifth straight week as signs a global recession is abating bolstered investors’ risk appetite, helping Asia’s emerging markets attract funds.

The won strengthened 0.6 percent this week to 1,333 per dollar as of 3pm in Seoul, according to Seoul Money Brokerage Services Ltd.

The yuan was little changed against the US dollar this week at 6.8338 per dollar from 6.8348 last Friday on speculation the government will keep the currency from appreciating to aid exporters as overseas sales slide.

The Philippine peso fell 0.3 percent to 48.03 per dollar, ending three weeks of gains.

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