Dollar Rises After G7 Meeting


The dollar rose the most in almost two weeks against the euro after Group of Seven officials expressed concern that swings in exchange rates will disrupt the global economy and financial markets.

The U.S. currency also gained the most in a week versus the yen after the G-7 said in a statement released late on April 11 in Washington that policy makers are concerned about ``sharp fluctuations,'' the first significant change in its view of currencies since February 2004. The finance ministers and central bankers didn't mention the dollar or suggest any plans to intervene in foreign-exchange markets.

The dollar rose to $1.5702 per euro at 6.51 a.m. in Tokyo, from $1.5808 late in New York on April 11, after dropping 0.6 percent last week. It earlier reached, $1.56 a euro, the strongest level since April 3. It strengthened to 101.28 yen from 100.95 yen. The yen traded at 159.06 per euro from 159.55.

The U.S. currency reached a record low of $1.5913 per euro last week even as traders speculated that finance leaders would voice support for the dollar. It may advance beyond $1.55 this week as investors buy the dollar to cover their wrong way bets, Trinh said.

The Dollar Index, which measures the currency against six of its main counterparts, has tumbled the past two months amid concern that credit-market losses will push the U.S. economy into a recession. The index is down 6.4 percent in 2008, after dropping 8.3 percent in each of the past two years.

The last time the G-7, which comprises the U.S., Japan, Germany, the U.K., France, Italy and Canada, intervened in the currency market was on Sept. 22, 2000, when they bought the euro after it tumbled 27 percent from its 1999 debut. The G-7 last propped up the dollar in 1995, when it sank to a post-World War II low of 79.75 yen.

The G-7 downgraded its outlook for the world economy from that of two months ago, blaming the U.S. housing recession, credit-market turmoil, high commodity prices and inflation pressures.

A weaker dollar has made U.S. goods and services more competitive in global markets. Exports increased 2 percent to a record $151.4 billion in February, the Commerce Department said last week in Washington.

 


TradingEconomics.com, Bloomberg
4/13/2008 4:20:07 PM