Dollar slips against euro on news of massive bank rescue
Sunday, 21 September 2008
NEW YORK, Sept 20 (AFP): The dollar weakened against the euro yesterday after the US authorities pledged to forge a massive financial rescue plan that raised concerns about its cost.
The euro rose to 1.4476 dollars around 2100 GMT from 1.4348 late Thursday in New York.
But the dollar gained ground against the yen, reaching 107.38 after 105.37 on Thursday.
In late New York trading, the dollar stood at 1.1043 Swiss francs, compared with 1.1047 late Thursday.
The pound was at 1.8305 dollars, up from 1.8185.
The US currency earlier in the day jumped on news the US government was hammering out a plan to purchase some of the bad debt that has crippled banks and helped fuel a global financial crisis.
"Forex market conditions have seen a short-term improvement, as a sigh of relief across global financial markets eases tensions and returns much-needed liquidity to traded markets," said David Rodriguez, analyst at Forex Capital Markets.
The US initiative also ignited major gains in stock markets around the world.
But the dollar's trajectory later reversed as investors further weighed the implications of the US action, analysts said.
"The possibility of such a solution certainly helped market sentiment," said economists at French bank BNP Paribas.
"But whether the rebound is sustainable depends on the details of the plan, for example, how do banks write down the assets and how to price the assets."
Analysts said the dollar's appeal hinges on how investors react to such persistent concerns over the health of the US economy and the soundness of the financial sector, and the cost of what it will take to fix the problems.
The euro rose to 1.4476 dollars around 2100 GMT from 1.4348 late Thursday in New York.
But the dollar gained ground against the yen, reaching 107.38 after 105.37 on Thursday.
In late New York trading, the dollar stood at 1.1043 Swiss francs, compared with 1.1047 late Thursday.
The pound was at 1.8305 dollars, up from 1.8185.
The US currency earlier in the day jumped on news the US government was hammering out a plan to purchase some of the bad debt that has crippled banks and helped fuel a global financial crisis.
"Forex market conditions have seen a short-term improvement, as a sigh of relief across global financial markets eases tensions and returns much-needed liquidity to traded markets," said David Rodriguez, analyst at Forex Capital Markets.
The US initiative also ignited major gains in stock markets around the world.
But the dollar's trajectory later reversed as investors further weighed the implications of the US action, analysts said.
"The possibility of such a solution certainly helped market sentiment," said economists at French bank BNP Paribas.
"But whether the rebound is sustainable depends on the details of the plan, for example, how do banks write down the assets and how to price the assets."
Analysts said the dollar's appeal hinges on how investors react to such persistent concerns over the health of the US economy and the soundness of the financial sector, and the cost of what it will take to fix the problems.