Dollar rises
Associated Press
Monday September 23, 5:52 pm ET
NEW YORK (AP) -- Shrugging off weaker U.S. equities, the dollar edged higher Monday against its major rivals, as traders used a slide in German stocks and an extremely narrow victory by Chancellor Gerhard Schroeder as an excuse to sell the euro.
A report indicating that the Japanese government is encouraging domestic investors to continue to shift funds overseas in a bid to further weaken the yen also helped push the dollar to its strongest level against the yen in three months.
The dollar's broad ascent appeared to have been sparked by a wave of euro selling, led by hedge funds and other speculative investors, traders said. What's more, while U.S. stocks clocked up some hefty losses during the session, these were overshadowed by a tumble in German stocks, further clouding the outlook for the euro zone's largest economy.
"The woes in German equities underline Chancellor's Schroeder's close election victory, which suggests he will find difficulty in the Bundestag to pass the necessary reforms for getting the economy back on its feet," said Ashraf Laidi, chief currency analyst at MG Financial.
Having traded as high as 98.60 cents earlier in the day, the euro fell at one point as low as 97.53 cents, which technical analysts believe paves the way for further euro declines.
The yen also seems set to suffer further, as sentiment continues to turn against the Japanese currency after last week's stunning bond market auction failure, as well as the Bank of Japan's unorthodox plan to buy part of the extensive equity holdings from Japanese banks.
The yen's losses Monday appeared to stem to some extent from a report by New York-based Medley Global Advisors, which suggested that the finance ministry is trying to encourage Japanese investors to continue to shift their funds overseas, a trend that would automatically help weaken the yen.
In late New York trading, the euro was quoted at 97.77 cents, down from 98.07 cents late Friday.
In late New York trading, the dollar was quoted at 123.79 yen, up from 123.35 yen late Friday.
The dollar was quoted at 1.4968 Swiss francs, up from 1.4937, and 1.5825 Canadian dollars, up from 1.5737. The British pound fell to $1.5507 from $1.5536. |
