The US dollar fell the most against the euro in 14 months and dropped to the lowest level this year versus the yen as economic reports added to evidence that the US recovery is losing momentum.
The greenback touched a level weaker than US$1.30 versus the shared currency as minutes of the Federal Reserve meeting last month indicated policy makers trimmed their forecasts for growth. The euro rallied for a third straight week against the US dollar before partial results of stress tests on the region’s banking system due on Friday.
“It’s really dollar weakness based on some evidence the economy is slowing,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co in New York. “The economic indicators are pointing strongly toward slower growth in the second half of the year.”
The US dollar declined 2.24 percent, the most since May last year, to US$1.2930 per euro on Friday, from US$1.2641 on July 9. It touched US$1.3008 on Friday, the weakest level since May 10. The US currency dropped 2.3 percent to ¥86.57, from ¥88.62, after reaching ¥86.27 on Friday, the lowest level since Dec. 1. The euro was little changed at ¥111.96, compared with ¥112.01.
Sterling dropped 0.8 percent to £0.8444 per euro as of 3:55pm in London on Friday after trading as high as £0.8459. The UK currency advanced 1.8 percent against the US dollar to US$1.5334.
Thailand’s baht topped gains in Asian currencies this week as the central bank joined India, South Korea, Malaysia and Taiwan in raising interest rates, boosting the yield advantage on the nations’ assets.
The baht strengthened 0.3 percent this week to 32.24 per US dollar in Bangkok, and reached 32.22, the highest level since May 10, according to data compiled by Bloomberg. Singapore’s dollar rose 0.2 percent to S$1.3757 for a third week of gains.
Malaysia’s currency dropped 0.4 percent from a week ago to 3.2100 per US dollar, paring this year’s advance to 6.9 percent.
Twelve-month yuan non-deliverable forwards traded at 6.6625 per US dollar from 6.6620 at the end of last week, reflecting odds the currency will strengthen 1.7 percent from Friday’s spot rate of 6.7767.
The New Taiwan dollar had a weekly loss of 0.1 percent as the central bank intervened to counter appreciation that may hurt exports, according to traders familiar with the monetary authority’s operations, who declined to be identified.
The NT dollar closed at NT$32.143 on Friday, from NT$32.125 a week ago.
Elsewhere this week, India’s rupee dropped 0.3 percent to 46.7825 per US dollar and South Korea’s won fell 0.6 percent to 1,203.39. Indonesia’s rupiah slipped 0.1 percent to 9,051 from 9,043 on July 9.
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