The safe-haven dollar mostly slipped Monday morning, with the euro rising back over $1.50, but managed to hold above 14-year yen lows as investors held their breaths on the Dubai debt crisis.
The 16-nation euro rose to $1.5015 from $1.4954 late Friday, while the British pound dipped to $1.6416 from $1.6479. The dollar fetched 86.26 Japanese yen from 86.70 yen.
On Friday, the dollar briefly fell below 85 yen, its lowest level since July 1995 as debt problems afflicting Dubai shook up the banking sector. Japanese Finance Minister Hirohisa Fujii called the yen's surge "a very serious situation." He added that Tokyo will take action as needed, suggesting that Japan may work with the U.S. and Europe to try to calm foreign exchange markets.
On Monday, Bank of Japan Gov. Masaaki Shirakawa acknowledged Japan is in deflation and said he is carefully monitoring foreign exchange levels. The central bank is ready to take steps as needed to maintain financial market stability, he said, according to the Japanese Kyodo News agency.
Shirakawa and Prime Minister Yukio Hatoyama are expected to meet as early as tomorrow to discuss the "situation," according to Brown Brothers Harriman analysts.
Speculation that the Japanese government or central bank might intervene is helping keep the dollar above the yen lows from Friday, said UBS currency analyst Patrick Ley.
Meanwhile, conflicting signals out of the Middle East kept the dollar trading in a tight range. Last week, Dubai World, the main investment arm of Dubai, asked to defer payments on $60 billion of debt for six months. That triggered fears of a massive debt default touching off a crisis, said CMC Markets' Michael Hewson in a note to investors Monday. But a weekend statement from the United Arab Emirates, where Dubai is located, saying it would make extra money available to all banks in the country helped calm investors. Later on Monday, however, a Dubai finance official said the government would not guarantee the company's debts.
In other morning trading, the dollar dropped to 1.0551 Canadian dollars from 1.0623 Canadian dollars late Friday, and fell to 1.0037 Swiss francs from 1.0065 francs.
The greenback was also lower against the New Zealand and Australian dollars.
1 comment:
I think that the fall of currencies is just the beginning of big impact of Dubai crisis on the world. It's also the evidence that the recovery from the global crisis will be much longer than many expected. It's sad that major rating agencies didn't predict that something like Dubai crisis can happen. Well, I'm curious how this situation will evolve.
Best regards,
Julie K.
Post a Comment