Euro Declines

The euro weakened the most against the dollar in almost three weeks as investors added to bets the European Central Bank will cut interest rates after inflation in the region slowed by the most since at least 1991.

The euro also fell against the yen, the Brazilian real and the South Korean won. Russia’s ruble headed for its biggest weekly decline against the euro in at least five years as the central bank let the currency depreciate and raised interest rates to halt an exodus of foreign capital.

The euro dropped 1.6 percent to $1.2701 per euro at 10:18 a.m. in New York, from $1.2904 yesterday. It’s down 0.9 percent this week. The dollar gained 0.4 percent to 95.60 yen, from 95.19 yesterday, and has declined 0.4 percent this week. The euro weakened to 121.49 yen, from 122.89 yesterday, trimming a weekly gain to 0.6 percent.

The ruble slumped 1.7 percent to 27.8777 per dollar and depreciated 0.3 percent to 35.5023 per euro. It lost 0.9 percent against the dollar and 3 percent versus the euro this week, the biggest decline since Bloomberg began collecting the data in December 2003.

India’s rupee fell the most in two weeks, losing 1.4 percent to 50.1075 per dollar, after terrorist attacks across Mumbai left at least 124 people dead. Authorities closed stock, bond, commodity and currency markets yesterday. The Thai baht declined for a third day, reaching 35.53, the lowest level since February 2007, as protesters occupied Bangkok’s international airport for a fourth day.

The rupee, the third-worst performer among Asia’s 10 most- active currencies outside Japan, according to data compiled by Bloomberg, may not fall further as a consequence of the terrorist attacks, Gerry Celaya, chief strategist at RedTower Inc. in Aberdeen, Scotland, said in a Bloomberg Television interview.

The dollar gained versus the euro and the yen today as investors bought the U.S. currency to rebalance their portfolio at the end of the month, said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York.

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 1.1 percent to 86.473. The index climbed to 88.463 on Nov. 21, the highest since April 2006.

The dollar was poised for a third monthly decline against the yen and its first monthly loss versus the euro since June, on speculation policy makers’ steps to spur growth and lending reduced demand for the relative safety of U.S. assets.,
11/28/2008 8:08:08 AM