The dollar declined beyond $1.40 against the euro for the first time in four months on speculation US creditworthiness deteriorated and near-zero borrowing costs made US assets less attractive to investors.
The yen rose to a nine-week high versus the dollar after Japan’s Finance Minister Kaoru Yosano said the government won’t intervene in the currency market and the Bank of Japan raised its economic assessment.
The dollar headed for its biggest weekly drop versus the euro since March after Pacific Investment Management’s Bill Gross said yesterday the US will “eventually” lose its AAA credit rating.
“The credit-rating story is bubbling to the surface,” said Alan Ruskin, head of international currency strategy in North America at RBS Securities Inc. in Greenwich, Connecticut.
“When you have a beginning of a global recovery, the fragility for the bond and the dollar is the most as capital may find a better place to go. You cannot fight the move.”
The dollar slid 0.8 per cent to $1.4007 per euro at 9.16am in New York, from $1.3890 yesterday, after reaching $1.4019, the weakest level since January 2nd. The US currency slumped 3.6 per cent this week, heading for the biggest loss since the five days ended March 20th.
Bloomberg