Dollar drops after Bernanke, Swissie slides
NEW YORK: The dollar fell against the euro and yen on Friday after Federal Reserve Chairman Ben Bernanke said the central bank can do more to boost growth but stopped short of detailing further action.
The Swiss franc tumbled to one-month lows versus both the dollar and euro after Swiss bank UBS said it may charge fees on some franc deposits.
Bernanke, speaking in Jackson Hole, Wyoming, said the Fed had marked down its outlook for US growth and it would extend its September meeting to two days from one to consider its options. However, he said the onus for boosting long-term growth prospects lay at the feet of the White House and the US Congress.
Failure to hint at another round of quantitative easing, or QE, boosted the dollar initially. Under QE, the Fed prints money to buy bonds, which depresses Treasury yields and encourages investors to seek higher returns elsewhere. An increase in the money supply erodes the value of the dollar. But those gains quickly faded.
“I would say that longer term, the Fed is keeping their powder dry,” said Andrew Busch, senior currency strategist at BMO Capital Markets in Chicago. “But the fact is that the Fed has the easiest monetary policy on the planet, and that will eventually force the dollar to go lower.”
The euro was last up 0.8 percent at $1.4489, near a session peak of $1.4502 set on trading platform EBS. Traders said the euro would struggle to hold above $1.45 and sell orders were said to be layered between $1.4460 and $1.4500. The dollar fell 1 percent to 76.67 yen.
In a sign of slowing growth, government data on Friday showed the US economy grew at just a 1 percent annual rate in the second quarter, down from the previous estimate of 1.3 percent.
“Ultimately, the US economy is stalling and the Fed won’t be changing rates soon, so there’s little reason for a sustained dollar rally,” said Brian Dolan, chief strategist at Forex.com in Bedminster, New Jersey.
High-yield currencies also rallied against the greenback, with the Australian dollar up 1.2 percent at $1.0560.
The dollar was last up 1.6 percent at 0.8057 Swiss franc, while the euro rose 2.4 percent to 1.1676 francs.
Swiss bank UBS may charge client banks a fee on cash accounts they use to clear transactions, it said on Friday, in a bid to discourage them from using the accounts to hoard safe-haven Swiss francs.
Worries about the US economy and the euro zone debt crisis have boosted demand for the safe-haven franc in recent months, driving it to record highs. But rapid appreciation has hurt Swiss exports and tourism, putting pressure on the economy.
Analysts said Swiss efforts to weaken the franc also suggested fears that investors are still eager to buy safe-haven currencies. reuters
Greenback appreciates against rupee
KARACHI: The dollar gained strength versus the rupee in the interbank market, dealers said Saturday. The dollar initiated the week’s trading at Rs 86.15 for buying, gained 64 paisas and closed at Rs 86.79 for buying and Rs 86.84 for selling. The euro also went up against the rupee as it started the week’s trading at Rs 122.26 for buying, depreciated by Rs 2.78 and closed at Rs 125.04 for buying and Rs 125.24 for selling. The British currency appreciated versus the rupee as it started the week’s trading at Rs 139.66 for buying, gained Rs 3.69 and closed at Rs 143.35 for buying and Rs 143.55 for selling.
Open market: The dollar strengthened versus the rupee, dealers said. The dollar initiated the week’s trading at Rs 86.00 for buying, appreciated by 40 paisas and closed at Rs 86.40 for buying and Rs 86.80 for selling. The euro also appreciated against the rupee as it commenced the week’s at Rs 122.20 for buying, increased by 80 paisas and closed at Rs 123.00 for buying and Rs 123.50 for selling. The pound also gained strength versus the rupee as it started the week’s trading at Rs 139.30 for buying, rose Rs 1.60 and closed at Rs 141.90 for buying and Rs 143.50 for selling. staff report