Dollar Falls To 14-month Low Against Euro
October 15, 2009 1 Comment
The dollar slid to a 14-month low against the euro on Wednesday as investor appetite for risk increased following upbeat comments from Intel Corp. and after a top Federal Reserve official indicated U.S. interest rates would likely remain low for a quite a while.
By early afternoon London time, the euro was trading 0.3 per cent higher at $1.4896, just down on the 14-month high of $1.4913 it hit earlier in the session.
Meanwhile, the dollar was 0.5 per cent lower against the Japanese currency at 89.20 yen.
As usual since the financial crisis became most acute just over a year ago, the dollar has been sold off heavily as stock markets have rallied strongly, and faltered more ahead of what was expected to be a strong opening on Wall Street following further signs of an economic recovery in China and optimistic statements from Intel, the world’s largest chip maker.
Dollar investments such as U.S. Treasuries are seen a safe haven in times of anxiety. But as doubts fade, money moves out of dollars and into riskier and potentially more profitable investments such as stocks and commodities, sending the dollar’s exchange rate down.The dollar’s ongoing falls against many of the world’s leading currencies, with the notable exception of many of Asia’s currencies, which are effectively pegged to the dollar by governments in the region, is beginning to cause mounting concerns in the capitals around the world.
If the rising rhetoric is any guide Japan’s senior vice finance minister Naoki Minezaki said dollar weakness was likely to persist, while Canada’s Prime Minister Stephen Harper voiced his concern about the rise in the Canadian dollar. And New Zealand’s finance minister Bill English said the Kiwi dollar’s ongoing strength raised questions over the recovery. European governments worry that a rising euro will choke off the fledgling economic recovery in the 16 countries that use the euro.