This week will be fun:
Greenback drops against euro, yen
CURRENCY: With concerns over accounting dimming the prospects for stocks in the US, investors decided to dump the dollar and wait for the dust to settle
BLOOMBERG, NEW YORK
The dollar weakened against the euro and snapped a five-day rally against the yen on concern some US corporate accounting methods cloak losses, dimming the appeal of investing in the biggest economy.
Declines in the dollar came as the Standard & Poor's 500 Index dropped 2.2 percent this week, its third weekly fall in four. JP Morgan Chase & Co was one of the index's three biggest losers on Friday. The Federal Reserve Bank of New York is examining the bank's accounting of commodity-related trades with bankrupt energy trader Enron Corp, the Wall Street Journal reported.
"We could see money start to move out of the US" if more accounting scandals emerge, said John McCarthy, a director of foreign-exchange trading at ING Baring (US) Capital Markets.
The US dollar declined to US$0.8765 per euro on Friday from US$0.8704 on Thursday, and to ?133.76 from ?134.20. It also fell against the British pound and Swiss franc.
The US currency slipped a third week against the euro, declining 0.3 percent. It gained 0.9 percent against Japan's currency as reports such as yesterday's rise in the index of leading economic indicators reinforced expectations the US economy is rebounding.
The US recession that began in March has probably ended, according to a survey by the National Association for Business Economics released yesterday. The group projected growth of at least 3.5 percent in the second half of 2002 and in 2003.
Speculation that US companies have been overstating profits has been a drag on the dollar by deterring foreigners from parking money in the US, analysts said. Benchmark US stock indexes have dropped since the start of the year as Enron's collapse raised concern about the accuracy of earnings. Enron hid US$1 billion of losses in as many as 3,000 partnerships.
"There does seem to be some nervousness going into the weekend about accounting practices" and the outlook for US stocks, said Michael Malpede, senior currency analyst at futures broker Refco Inc in Chicago.
The dollar slipped to US$1.4329 per pound from US$1.4264, and to SF1.6884 from SF1.6994.
"There was just big selling of dollars across the board," particularly at the US$0.8720-per-euro level, which was the euro's approximate high yesterday, said ING's McCarthy. "We have the financial markets roiled and the underlying economy looking like it's doing better," he said. |
