Dollar Falls for Second Day

The dollar fell for a second day against the euro as Fannie Mae reported a larger-than-expected $2.19 billion loss, indicating the worst of financial-market turmoil may not be over., Bloomberg 5/6/2008 10:31:37 AM

The currency also weakened versus the yen after the largest U.S. mortgage-finance company said it will cut its dividend and raise $6 billion in capital. The Swiss franc increased against the Brazilian real, the Australian dollar and the pound on speculation investors will reduce holdings of higher-yielding assets financed with loans in Switzerland.

The dollar decreased 0.2 percent to $1.5529 against the euro at 12:44 p.m. in New York, from $1.5496 yesterday. It reached a record low of $1.6019 per euro on April 22. The dollar dropped 0.2 percent to 104.68 yen, from 104.85 yesterday. The euro traded at 162.62 yen, compared with 162.46.

Fannie Mae said its credit-market losses will be worse next year than in 2008. The Washington-based company and its smaller rival Freddie Mac may each need as much as $15 billion in capital to cope with delinquencies and foreclosures.

Crude oil rose above $122 a barrel for the first time in New York on threats to supply in Nigeria and Iraq and growing global fuel consumption. The price may go as high as $200 a barrel within two years, Goldman Sachs Group Inc. analysts led by Arjun N. Murti said in a report yesterday.

Investors move to commodities as a hedge against the dollar when the U.S. currency falls against the euro. The euro versus the dollar has had a correlation of 0.96 with the price of crude oil in the past 12 months. A reading of 1 would mean they move in lockstep.

Dollar Falls for Second Day