Monday June 15, 2009 - 10:55:55 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar gains broadly; EZ econ concerns dent euro
* Dollar gains as Russia's Kudrin voices confidence in dlr
* EZ econ worries help push euro down 1 pct vs dollar
* Record fall in EZ jobs; IMF chief says worst not over
* G8 finance ministers mull exit strategies; BRIC awaited
(Updates prices, adds quotes)
By Jessica Mortimer
LONDON, June 15 (Reuters) - The dollar gained broadly on
Monday after Russia's finance minister expressed confidence in
the U.S. currency, while the euro fell sharply against the
dollar on concerns about the weakness of the euro zone economy.
Speaking on the sidelines of a Group of Eight finance
ministers in Italy, Russia's Alexei Kudrin said the dollar's
role as the world's main reserve currency is unlikely to change
in the near future [ID:nFCA000184].
This bolstered the dollar, helping it recover further after
recent sharp falls against the euro and other major currencies,
which had benefitted as optimism that the global economy was on
the road to recovery boosted perceived higher risk assets.
The euro was particularly weak, falling more than 1 percent
against the dollar on concerns the euro zone economy may be
lagging other countries after much weaker-than-expected euro
zone industrial production data late last week.
Euro zone employment figures on Monday further highlighted
the depth of the recession facing the region as it lost a record
1.22 million jobs during the first quarter of 2009.
Optimism on the global economy as a whole was also dealt a
blow on Monday as International Monetary Fund chief Dominique
Strauss-Kahn warned that the worst of the global economic crisis
may be yet to come. [ID:nLF328969].
"The dollar is on a more stable footing after the comments
at the G8 from the Russian finance minister, given that Russia
is such a large holder of U.S. Treasuries," BTM-UFJ currency
economist Lee Hardman said.
"Lingering concerns about the euro zone economy and its
banking sector are also weighing on euro, which is still seen as
a very overvalued currency," he added.
At 1035 GMT, the dollar jumped 0.8 percent against a basket
of currencies to 80.775 .DXY.
The euro fell 1 percent against the U.S. currency to $1.3882
<EUR=>. It also lost 1.3 percent against the Japanese yen to
136.14 yen <EURJPY=R>.
Sharp falls in oil prices CLc1 also weighed on
commodity-related currencies. The Australian dollar tumbled 1.3
percent against its U.S. counterpart to $0.8015 <AUD=D4> while
the U.S. dollar rose 0.9 percent against the Canadian dollar to
BRIC SUMMIT LOOMS
The G8 finance ministers' meeting focused on how finance
ministers might unwind some of the drastic steps taken to fight
the credit crisis once a recovery got under way [ID:nL5701713].
Some traders said a cautious tone from the meeting helped
temper recent optimism about the economy, encouraging bets in
riskier assets to be cut further and supporting the U.S. dollar.
The comments from Russia's Kudrin meanwhile alleviated
concern that central banks around the world are diversifying
their foreign exchange reserves away from the dollar
Investors were cautiously awaiting a summit of leaders of
Brazil, Russia, India and China (BRIC) in the Russian city of
Yekaterinburg on Tuesday, however, for any further comments on
"For a more lasting decline to take place in the euro
against the dollar ... these concerns about central bank reserve
diversification would have to be cleared up," said Michael
Klawitter, senior currency strategist at Dresdner Kleinwort in
Russia holds about 30 percent of its $404.2 billion foreign
exchange reserves in U.S. Treasuries, making it the
fifth-largest holder of U.S. government debt.
China, the world's largest holder of U.S. Treasuries, has
$707.9 billion, according to the most recent U.S. Treasury
Department data, while Japan has $686.7 billion.
(Reporting by Jessica Mortimer; Editing by Victoria Main)
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