Dollar Rises


The dollar rose for a second day against the euro on speculation a drop in oil prices will support growth in the world's largest energy consumer.

The currency also traded near a seven-month high versus the yen following the biggest decline in crude costs in more than three years. The euro fell against the yen before a survey tomorrow that may show business confidence in Germany slid to the lowest since 2005.

The dollar climbed to $1.4721 per euro at 6:51 a.m. in London from $1.4793 late in New York on Aug. 22, when crude oil tumbled 5.4 percent, the most since December 2004. It may advance to $1.47 per euro today, Shimizu forecast.

The U.S. currency traded at 110.08 yen from 110.07 at the end of last week. It rose to 110.66 yen on Aug. 15, the highest since Jan. 2. The euro declined to 162.01 yen from 162.83.

The greenback also rallied against other Asian currencies. The South Korean won fell to 1,074.90 per dollar from 1,062.20 on speculation overseas investors will cut holdings of local shares. The Malaysian ringgit slumped to an eight-month low of 3.3715 versus the dollar on speculation the country's central bank will refrain from raising interest rates today.

Crude oil for October delivery was at $114.79 a barrel in New York after earlier falling to $114.03, the lowest since Aug. 20. The euro-dollar exchange rate and oil had a correlation of 0.9 in the past year, according to Bloomberg calculations. A reading of 1 would mean they moved in lockstep.


TradingEconomics.com, Bloomberg
8/25/2008 6:09:15 AM