Dollar Slips At End Of Turbulent 2010

1 Jan

NEW YORK: The dollar slipped against other major currencies Friday at the end of a volatile year as US economic prospects appeared brighter and worries about eurozone debt eased.

The euro jumped to 1.3381 dollars around 2200 GMT from 1.3286 dollars in New York late Thursday.

The dollar dropped to 81.28 yen from 81.55 yen on Thursday.

“The lack of risk aversion is being driven by the positive US economic releases from yesterday with weekly jobless claims and pending home sales coming in better then expected,” said Andy Douglass at PNC.

In year-end accounts preening, fund managers sold safe-haven dollars to buy up currencies that offer better returns on investments, said Jasmine Poh, an analyst at French bank BNP Paribas.

The US dollar offered little return on investment as the Federal Reserve held near-zero interest rates for a second straight year to support the economy's recovery from the worst recession since the 1930s.

The greenback also suffered as the result of the Fed's decision to buy 600 billion dollars' worth of Treasury bonds through mid-2011 to prop up the flagging recovery.

The eurozone's common currency was shaken by debt and deficit crises in Greece and Ireland and fears of contagion in other bloc members.

The euro has dropped by around seven percent against the dollar in 2010. After beginning strongly — its intra-year high was 1.4579 dollars on January 13 — the single currency plunged to a four-year low of 1.1877 dollars in June.

It has since clawed back, aided by strong recovery for Europe's biggest economy Germany.

“We haven't seen the capitulation in the single currency that some expected even as the peripheral debt crisis imploded,” said Kathleen Brooks, an analyst at Forex.com.

“This reinforces our belief that this remains fundamentally a credit crisis rather than a currency crisis for the currency bloc. This leaves the euro in a stable position as we move into 2011.”

At the stroke of midnight Friday in Estonia, the nation of 1.3 million bid farewell to its kroon, adopted in 1992 to replace the Soviet ruble, and became the eurozone's 17th member.

It is a move pitched by the government as economic good sense despite the eurozone's turmoil, but which has won only a muted welcome from the Baltic state's public.

Opponents of the switch plastered the EU Baltic state's capital Tallinn with posters on Friday.

“Estonia! Welcome to the Titanic!” read posters euro opponents fixed to garbage cans in central Tallinn.

In late New York trade, the pound rose to 1.5599 dollars from 1.5423 Thursday.

The dollar also fell against the Swiss currency, to 0.9337 Swiss francs from 0.9350.

– AFP/fa

Channel News Asia

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: