Dollar Rises Most Versus Euro in a Month

The dollar rose the most against the euro in a month as U.S. policy makers indicated they're concerned about the currency's 7 percent drop this year.

The U.S. currency strengthened from a six-week low as Treasury Secretary Henry Paulson said in an interview with CNBC that he would ``never'' rule out currency intervention and Federal Reserve of New York President Timothy Geithner said the central bank is watching the dollar. The yen weakened after a report indicated Japan's longest postwar expansion may be over.

The dollar increased 0.8 to $1.5654 per euro at 2:48 p.m. in New York, from $1.5778 on June 6. It earlier touched $1.5843, the weakest level since April 24. The yen dropped 1.1 percent to 106.07 versus the dollar, from 104.93. Japan's currency decreased 0.3 percent to 166.05 per euro, from 165.54. It touched 167.14, the weakest level since Nov. 7.

The dollar was supported versus the euro as an industry report showed an unexpected increase in Americans signing contracts to buy existing homes in April. The index of pending home resales rose 6.3 percent to 88.2, the highest in six months, following a 1 percent drop in March, the National Association of Realtors said.

The dollar dropped 1.4 percent against the euro last week, the most since March, after European Central Bank President Jean-Claude Trichet said in Frankfurt that policy makers may raise borrowing costs in July to contain inflation and the U.S. Labor Department reported that the unemployment rate increased the most in May in more than two decades.

The dollar has fallen 11 percent against the euro and 9 percent versus the yen since September, when the Fed began to lower borrowing costs. UBS AG, the second-biggest currency trader, cut its one-and three-month dollar forecasts against the euro to $1.60 and $1.53, from $1.50 and $1.47, previously.

Dollar Rises Most Versus Euro in a Month, Bloomberg
6/9/2008 12:04:00 PM