Dollar Heads for Weekly Gain

The dollar was poised for a third weekly gain against the euro as a plunge in global stocks increased demand for the safety of U.S. government debt., Bloomberg 11/21/2008 12:16:34 PM

The yen increased versus the euro, the dollar, the Brazilian real and the Mexican peso this week on speculation investors will sell higher-yielding assets and pay back low-cost loans in Japan’s currency. Japan’s Finance Minister Shoichi Nakagawa said today abrupt movements” in stocks and currencies are undesirable.

The dollar traded at $1.2536 per euro at 3:07 p.m. in New York, heading for a 0.6 percent gain from $1.2605 on Nov. 14. The yen was at 95.56 versus the dollar, up 1.7 percent from 97.14. It traded at 119.64 against the euro, increasing 2.3 percent this week from 122.39.

The ICE’s Dollar Index, which tracks the greenback against the euro, the yen, the pound, the Canadian dollar, the Swiss franc and Sweden’s krona, rose to 88.463 today, the highest level since April 2006. It was headed for its third weekly gain.

The dollar dropped 0.5 percent against the euro today, while the yen decreased 1.8 percent versus the greenback and 2.3 percent against the euro.

The Australian dollar was poised for a second weekly decline, dropping 3.7 percent to 62.40 U.S. cents. The Aussie gained 2.2 percent today after the Reserve Bank purchased the currency as it approached a five-year low. The Australian dollar lost 16 percent last month even as the central bank bought A$3.15 billion ($1.96 billion) of its currency in October, the biggest net purchase on record.

The yen increased 12 percent to 38.43 against the real and 8.5 percent to 6.85 versus the peso this week on speculation investors will unwind carry trades, in which they get funds in a country with low borrowing costs and buy assets where returns are higher.