Tuesday February 19, 2008 - 12:11:14 GMT
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Reuters - www.reuters.com
FOREX-Dollar retreats, yen rises on bank worries - Tue Feb 19, 2008 6:58am EST
LONDON, Feb 19 (Reuters) - The dollar fell to a two-week low against the euro on Tuesday and the yen rose as investors pared risky trades amid worries about the banking sector, fuelled by reports of further writedowns by major banks.
But higher-yielding currencies climbed led by the Australian dollar <AUD=> after minutes from the central bank's February policy meeting cemented expectations for more interest rate hikes -- moves that would boost the currency's yield appeal.
Keeping investors cautious, Credit Suisse (CSGN.VX: Quote, Profile, Research) said it has written $2.85 billion off the value of its asset-backed investments, while a Financial Times report said that U.S. banks have been quietly borrowing "massive amounts" from the U.S. Federal Reserve in recent weeks. [ID:nL19301008]
"There is a little bit of credit concern creeping back with the Credit Suisse revelation and the market is sensitive to that sort of issue," said Steve Barrow, currency strategist at Bear Stearns.
"Yet at the same time, and whilst the yen has got a bit stronger, some of the riskier currencies haven't suffered that much. If you look at the Aussie, that's continued to do well after what we saw from the Reserve Bank (of Australia)."
At 1131 GMT, the dollar was down 0.3 percent against a basket of major currencies .DXY at 75.845 around two-week lows. Versus the yen, it slid 0.8 percent to 107.32 yen <JPY=>.
The euro rose half a percent to two-week highs of $1.4750 <EUR=>, but was also weaker against the Japanese currency, slipping 0.3 percent to 158.18 yen <EURJPY=>, well off a three-week high near 159 yen set earlier.
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