The US dollar gained against the euro and the yen after reports showed US retail sales and consumer confidence surged, easing investor concern that the war in Iraq was slowing the world's biggest economy.
Traders said a stronger economy will lure more investment, helping offset a current account gap that drains about US$1.5 billion a day from the US. The dollar rose against 12 of the 16 most widely traded currencies.
"People are starting to feel more comfortable with investing in the US and buying stocks," Rick Zauderer, who helps manage US$800 million at Friedberg Mercantile Group in Toronto. "The reports suggest some underlying strength to the US economy. Now that the war is coming to an end, people will focus on a long-term view of the economy."
The dollar rose to Japanese Yen 120.52 at 5pm in New York from Japanese Yen 119.67. It strengthened to US$1.0755 per euro from US$1.0782. The dollar pared its advance after the Standard & Poor's 500 Index reversed a gain of as much as 1.4 percent. Friday's rally sent the dollar to a second week of gains against the yen and erased most of its losses in the week against the euro.
Investors have "to be convinced that the economy is going to do well in the aftermath of the war, and if it does well, it will draw in enough foreign investment to keep the dollar strong in the face of a yawning current account deficit," said Daniel Katzive, a currency strategist at UBS Warburg, the second-biggest trader in the US$1.2 trillion-a-day foreign exchange market, in Stamford, Connecticut. "Today's numbers are a good start to" building that confidence.
Sales at US retailers jumped 2.1 percent in March, reversing a 1.3 percent drop in February, the Commerce Department said. The increase was the largest since October 2001. The University of Michigan said its consumer confidence index climbed to 83.2 this month from a nine-year low of 77.6 in March.
"People are feeling better, now that there will be change of regime in Iraq," Zauderer said. "Right now, there is less of a terrorist threat in the US."
The US said Saddam Hussein's political faction was finished as allied forces battled loyalists in the dictator's home of Tikrit and sought to curb chaos and looting in Baghdad and other major cities. ``The regime is gone,'' spokesman Ari Fleischer told reporters at the White House.
The US economy will expand 2.2 percent this year after growing 2.4 percent last year, the International Monetary Fund said this week. Some analysts said that may be strong enough growth to attract enough investment to finance the deficit in the current account, the broadest measure of trade. The gap widened to a record US$136.9 billion in the fourth quarter.
The rise in retail sales and confidence is "very helpful to the dollar after several sessions of poor economic numbers," said Craig Larimer, head of international market analysis at Banc One Capital Markets Inc. in Chicago. Still, "the market is really going to want to see more performance on production and employment and that's a ways down the road."
Larimer forecasts the dollar will rally to as strong as US$1.01 per euro in the next three months.
Treasury Secretary John Snow yesterday said efforts to boost economic growth worldwide would top the agenda at a meeting of finance ministers from the G7 industrial countries today and Saturday. One of the biggest concerns is Japan, which the International Monetary Fund estimates will grow just 0.8 percent this year.
"The Japanese economy is not performing as well as it should, or will eventually," Snow said. "I don't think the answer lies in monetary policy, but in a set of policies that remove some rigidities in the economy," he said.
The dollar's gains against the yen also came amid speculation that Japan will sell its currency for a fourth month to stem a rally that has slowed the country's exports. The yen has risen 9 percent against the dollar in the past 12 months, making the country's products more expensive in the US.
FALLING BEHIND: Samsung shares have declined more than 20 percent this year, as the world’s largest chipmaker struggles in key markets and plays catch-up to rival SK Hynix Samsung Electronics Co is laying off workers in Southeast Asia, Australia and New Zealand as part of a plan to reduce its global headcount by thousands of jobs, sources familiar with the situation said. The layoffs could affect about 10 percent of its workforces in those markets, although the numbers for each subsidiary might vary, said one of the sources, who asked not to be named because the matter is private. Job cuts are planned for other overseas subsidiaries and could reach 10 percent in certain markets, the source said. The South Korean company has about 147,000 in staff overseas, more than half
TECH PARTNERSHIP: The deal with Arizona-based Amkor would provide TSMC with advanced packing and test capacities, a requirement to serve US customers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is collaborating with Amkor Technology Inc to provide local advanced packaging and test capacities in Arizona to address customer requirements for geographical flexibility in chip manufacturing. As part of the agreement, TSMC, the world’s biggest contract chipmaker, would contract turnkey advanced packaging and test services from Amkor at their planned facility in Peoria, Arizona, a joint statement released yesterday said. TSMC would leverage these services to support its customers, particularly those using TSMC’s advanced wafer fabrication facilities in Phoenix, Arizona, it said. The companies would jointly define the specific packaging technologies, such as TSMC’s Integrated
An Indian factory producing iPhone components resumed work yesterday after a fire that halted production — the third blaze to disrupt Apple Inc’s local supply chain since the start of last year. Local industrial behemoth Tata Group’s plant in Tamil Nadu, which was shut down by the unexplained fire on Saturday, is a key linchpin of Apple’s nascent supply chain in the country. A spokesperson for subsidiary Tata Electronics Pvt yesterday said that the company would restart work in “many areas of the facility today.” “We’ve been working diligently since Saturday to support our team and to identify the cause of the fire,”
Sales RecORD: Hon Hai’s consolidated sales rose by about 20 percent last quarter, while Largan, another Apple supplier, saw quarterly sales increase by 17 percent IPhone assembler Hon Hai Precision Industry Co (鴻海精密) on Saturday reported its highest-ever quarterly sales for the third quarter on the back of solid global demand for artificial intelligence (AI) servers. Hon Hai, also known as Foxconn Technology Group (富士康科技集團) globally, said it posted NT$1.85 trillion (US$57.93 billion) in consolidated sales in the July-to-September quarter, up 19.46 percent from the previous quarter and up 20.15 percent from a year earlier. The figure beat the previous third-quarter high of NT$1.74 trillion recorded in 2022, company data showed. Due to rising demand for AI, Hon Hai said its cloud and networking division enjoyed strong sales
RSS