BLBG: Dollar Near One-Week High After Obama Says Currency Is ‘Strong’
The dollar traded near the highest level in a week against the euro after President Barack Obama said the U.S. currency is “extraordinarily strong” because investors are confident in the economy.
The yen rose for a second day versus the European currency on speculation Japanese companies are bringing back earnings on overseas assets before the financial year ends next week. The euro may fall for a fifth day against the British pound, the longest losing stretch in 10 weeks, before a German report today that economists say will show business confidence dropped to the lowest level in more than 26 years.
“The confidence about the U.S. economy and the dollar is gradually recovering,” said Ryohei Muramatsu, manager of Group Treasury Asia in Tokyo at Commerzbank AG, Germany’s second- largest lender. “Thanks to aggressive policy steps there is an emerging view that the U.S. economy, which had slipped into a recession first, has a better chance of pulling out of the doldrums ahead of other countries.”
The U.S. currency traded at $1.3480 per euro as of 6:30 a.m. in London from $1.3468 late in New York yesterday, when it reached $1.3431, the strongest since March 19. The greenback was at 97.58 yen from 97.86 yen. The euro was at 91.85 British pence from 91.72 pence. The yen traded at 131.53 per euro from 131.81.
The Dollar Index gained for a second day as the U.S. president said his efforts to revive the economy are starting to take hold and that his fiscal 2010 budget will build a foundation for future growth.
Global Currency
“I don’t believe there is the need for a global currency,” Obama said at a press conference at the White House in Washington. The dollar is in demand “because investors consider the United States the strongest economy in the world with the most stable political system,” he said.
Obama’s comments came after the U.S. Treasury Department announced this week a plan to help remove toxic assets from banks’ balance sheet. The Federal Reserve starts purchasing long-term Treasuries today to bring down borrowing costs.
The Dollar Index, which the ICE uses to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, rose 0.2 percent to 84.060 after reaching 82.63 on March 19, the lowest level since early January.
The yen rose against 14 of the 16 most-actively traded currencies on speculation Japanese exporters and investors took advantage of its decline to a five-month low versus the euro to bring funds home.
Exporters
“There’s talk that Japanese exporters purchased the yen,” said Toshihiko Sakai, head of trading for foreign exchange and financial products in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s biggest bank. “The yen may appreciate.”
Demand for the euro may weaken on concern the recession in Europe’s largest economy is deepening.
The Ifo institute’s German business climate index dropped to 82.2 in March from 82.6 in February, according to a Bloomberg News survey of economists. That would be the lowest level since November 1982. Ifo will release the report at 10 a.m. in Munich.
“The European Central Bank has been behind the curve on monetary policy, which means that there is room for interest- rate differentials between the region and the rest of the world to narrow,” said Hiroshi Maeba, deputy managing director of foreign-exchange trading at Nomura Securities Co. in Tokyo. “This prospect may weigh on the euro.”
The ECB will lower its benchmark interest rate by half a percentage point to 1 percent when policy makers meet April 2, a separate Bloomberg survey shows.
