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Dollar weakens as G20 fails to inspire
NEW YORK
Petroleumworld.com, November 18, 2008The dollar traded mainly lower Monday as financial markets saw renewed caution after a summit of world leaders failed to deliver specific measures to boost the global economy.
The euro rose to 1.2645 dollars at 2200 GMT from 1.2591 dollars reached late in New York on Friday.
The dollar was at 96.35 yen on Monday from 97.06 yen on Friday
At a weekend summit in Washington, leaders from the Group of 20 rich and emerging nations pledged to cooperate in fighting the global financial crisis but offered no concrete measures such as coordinated stimulus plans.
"Investors viewed the result of the summit as mere hollow pledges by world leaders to stimulate growth," said Chris Lafakis at Economy.com.
"The dollar is faltering against major currencies. Worries that the US might have to issue more debt to finance a growing deficit are behind the dollar's weakness."
The yen apparently shook off data published on Monday revealed that Japan's economy had entered recession.Japan's economy, the second largest in the world, unexpectedly contracted 0.1 percent in the third quarter after shrinking 0.9 percent in the second, the Cabinet Office said.
The data "showed that the economy is in a recession phase. There is a risk it may worsen further," said Economic and Fiscal Policy Minister Kaoru Yosano.
Antonio Sousa, chief strategist at Forex Capital Markets, said the dollar is nonetheless expected to hold generally firm during the current economic turmoil.
"With the world economy expected to slow down even further, the demand for commodities will probably dry up which could suggest further losses to commodity sensitive currencies like Australian dollar and Canadian dollar," he said.
"In addition, high exchange rate volatility combined with a significant deterioration of interest rate differentials in favor of the US dollar is likely to keep high yielding currencies under stress."
Dealers expect further interest rate cuts by the European Central Bank in a bid to tackle a deep slump in the eurozone. Earlier this month the ECB cut its key lending rate by 0.50 percentage points to 3.25 percent.The pound recovered on Monday slightly after hitting a historic low against the euro last week, and also firmed against the greenback.
In late New York trade, the dollar stood at 1.1977 Swiss francs after 1.1976 Friday.
The pound was at 1.4982 dollars from 1.4733.
Story from AFP
AFP 17 2208 GMT 11 08Copyright© 2008 respective author or news agency. All rights reserved.
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