Foreign banks are paying near the highest premiums in at least a decade to borrow in dollars in the swaps market even after the Federal Reserve increased the amount of funds available to other central banks this week to $620 billion from $330 billion. The U.S. Senate scheduled a vote for later today on a $700 billion rescue of the financial industry.
The dollar advanced 0.5 percent to $1.4019 per euro at 3:30 p.m. in New York, from $1.4092 yesterday. It touched $1.3882 on Sept. 11, the strongest level in a year. The dollar fell 0.1 percent to 105.99 yen, from 106.11. The euro dropped 0.7 percent to 148.57 yen, from 149.56.
Sterling fell as much as 1 percent to $1.7634, the lowest level since Sept. 12, after an industry report showed U.K. manufacturing contracted last month at its fastest pace in 16 years. Against the euro, the pound decreased as much as 0.5 percent to 79.53 pence.
The U.S. currency fell against the yen as the Tempe, Arizona-based Institute for Supply Management reported its factory index dropped last month to 43.5, the lowest since October 2001, from 49.9 in August. A reading of 50 is the dividing line between expansion and contraction.
The euro fell versus the dollar a day before a meeting of the European Central Bank at which policy makers led by President Jean-Claude Trichet are forecast to keep the main refinancing rate at 4.25 percent.
Canada's dollar strengthened for the first time in three days, rising from the lowest in more than a week, after the U.S. dollar fell against most major currencies. The Canadian dollar climbed as much as 0.9 percent to C$1.0547 per U.S. dollar, from C$1.0644 yesterday.
Swiss franc, which has gained 4.6 percent against the euro this year, fell to as low as 1.5813 after Swiss manufacturing contracted for the first time in more than three years in September.
The Australian and New Zealand dollars fell to the lowest in more than a week on speculation their central banks will cut interest rates to combat slowing economic growth. The Australian dollar fell 1.1 percent to 79.73 U.S. cents as of 4:50 p.m. in Sydney. New Zealand's dollar weakened to 66.42 U.S. cents, the lowest since Sept. 18, before trading at 67.33 U.S. cents from 67.59 cents late in Asia yesterday.
Russia's ruble snapped a four-day drop against the dollar after the U.S. Senate agreed to vote on a $700 billion rescue package. The managed currency strengthened to 25.5972 per dollar by 10:27 a.m. in Moscow, from 25.6439 yesterday, when it declined 1.3 percent.
India's rupee fell to a five-year low on speculation companies increased purchases of dollars needed to meet import costs. The rupee fell as much as 0.5 percent to 47.23 per dollar, the lowest since May 2003, before trading at 47.0925 as of 10:22 a.m. in Mumbai. The rupee fell 9.2 percent in the three months through September, its third quarterly loss and its biggest since March 1992.