Saturday February 14, 2009 - 11:25:30 GMT
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Reuters - www.reuters.com
FOREX NEWS-US dollar gains on yen, falls against euro
* G7 statement does not mention yen or pound
* Euro shrugs off record euro zone GDP fall
* Sterling off highs after Lloyds news
(Recasts, updates prices)
By Nick Olivari
NEW YORK, Feb 13 (Reuters) - The U.S. dollar climbed
against the yen but fell against other major currencies on
Friday as investors found nothing new in the communique from
the Group of Seven finance chiefs at their Rome meeting.
The G7 draft statement, seen by Reuters and released late
in the New York session, made no reference to specific
currencies other than China's yuan. For more details,
The G7 group of industrialised nations welcomed China's
commitment to a more flexible exchange rate, which should lead
to a stronger yuan currency, the draft statement said.
"The G7 said nothing new of fresh or that wasn't
anticipated," said Marc Chandler, a currency strategist at
Brown Brothers Harriman in New York.
Some investors had been anticipating the statement would
single out the Japanese currency for excessive strength though
there were signals that would not be the case.
Earlier in the week, Japanese Finance Minister Shoichi
Nakagawa said Japan will act decisively against excessive
currency moves, but suggested singling out the strong yen in a
G7 communique would not work while the damage from the global
economic crisis is spreading.
UK Chancellor of the Exchequer Alistair Darling said on
Friday that he believed any discussion of foreign exchange
would be "in general terms."
In late afternoon New York trading, the dollar rose 1.2
percent against the yen to 91.93 yen <JPY=>. The dollar gained
0.1 percent for the week against the yen.
The euro also gained on the day against the yen, up 1.4
percent at 118.49 <EURJPY=>.
Earlier bleak euro zone GDP figures had raised concerns G7
leaders may discuss the pound's recent weakness against the
In fact, sterling rallied early, with investors squaring
market positions ahead of the G7. For details, see
But the pound came off its highs pressured by sharp falls
in UK banking stocks after Lloyds Banking Group unveiled a
hefty loss related to its HBOS subsidiary.
Lloyds said HBOS lost about 8.5 billion pounds last year,
news which sent shares in Lloyds and other UK banks tumbling
and pushed the UK's FTSE share index into the red.
Sterling last traded at $1.4382 <GBP=>, up 0.9 percent. The
euro fell 0.9 percent against sterling to 0.8938 <EURGBP=>.
Most analysts were already convinced there would be no
major pronouncements on the yen and sterling, and once the
meeting ends markets will again look to equities again for
"We are still hinging on risk appetite and we are keying
off equities," said Shaun Osborne, chief currency strategist,
at TD Securities in Toronto.
"That story on mortgage subsidy gave equities a lift
including the dollar versus the yen and there's still some
carry-over from that."
Investors tend to sell the dollar and yen with increased
optimism for global economic prospects.
Markets welcomed the news that the Obama administration may
unveil a broad plan to put a floor under the housing market.
A rising wave of U.S. mortgage delinquencies has saddled
the global banking system with big losses that have led banks
to recoil from lending, choking economies around the world.
The White House though, cautioned on Friday about having
unreasonable expectations about President Barack Obama's plan
to stem home foreclosures. [nWBT010644]
The euro was little changed <EUR=> against the dollar at
$1.2861, generally shrugging off data showing the euro zone
economy in a deeper recession than expected. The euro was down
0.7 percent against the dollar on the week.
(Reporting by Nick Olivari and Gertrude Chavez-Dreyfuss)
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