The decline pushed the trade-weighted U.S. Dollar Index down by the most since July as the greenback became the cheapest funding currency in the London interbank lending market. The Brazilian real and South African rand rallied more than 25 percent this year as investors sought higher-yielding assets in emerging-market nations.
The U.S. currency depreciated 1.1 percent to $1.4491 per euro at 4:09 p.m. in New York, from $1.4332 yesterday, after reaching $1.4535, the weakest since Dec. 18. The dollar dropped 0.9 percent to 92.22 yen, from 93.08. The euro advanced 0.2 percent to 133.71 yen, from 133.39.
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the euro, yen, pound, franc, Canadian dollar and Swedish krona, fell as much as 1.2 percent to 77.047 today, the lowest level since Sept. 29. It was the biggest intraday drop since July 31. The index was down 14 percent from its high this year of 89.624.
The Swiss franc advanced as much as 1.6 percent to 1.0433 per dollar today, the strongest level since July 31, 2008, as the three-month London interbank offered dollar rate dropped below that of the franc for the first time since November, making the greenback the cheapest currency for investors to fund purchases of higher-yielding assets.
The drop in the dollar today didn’t seem to deter investors from U.S. debt. Treasuries were little changed after a record $38 billion sale of three-year securities drew the strongest demand in almost a year in the first of this week’s three note and bond auctions totaling $70 billion.
Traders are betting on longer-term declines in the dollar after the U.S. budget gap reached $1 trillion. Forward contracts show the greenback weakening to $1.49 per euro in the next 10 years, compared with an average of $1.17 since the single European currency was introduced in 1999.
The pound rose 0.9 percent to $1.6496 after the Office for National Statistics in London said factory output increased 0.9 percent in July. Sterling depreciated 0.3 percent to 87.89 pence per euro.