Monday June 15, 2009 - 20:35:31 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar rises, lifted by Russian comments
* Russia's Kudrin voices confidence in U.S. dollar
* Euro zone worries help push euro below $1.38
* Data shows slump in U.S. factory sector
* Euro zone banks could face further $283 bln in writedowns
(Updates prices, adds quotes)
By Wanfeng Zhou
NEW YORK, June 15 (Reuters) - The U.S. dollar rose broadly
on Monday after Russia expressed confidence in the greenback as
the world's reserve currency, while concerns about the euro
zone economy undermined the euro.
The single European currency fell below $1.38 to its lowest
level in more than three weeks after the European Central Bank
said euro zone banks will probably need to write down another
$283 billion. See [ID:nLF804645].
Speaking on the sidelines of a Group of Eight finance
ministers meeting in Italy, Russian Finance Minister Alexei
Kudrin said the dollar's role as the world's main reserve
currency is unlikely to change in the near future.
The comments followed statements from a top Russian central
bank official last week that it would cut the share of U.S.
Treasuries in its reserves. But Kudrin's comments alleviated
concerns that major emerging market countries may be
diversifying away from the dollar ahead of a summit of leaders
of Brazil, Russia, India and China (BRIC) in Russia on Tuesday.
"Reserve diversification has really come into question
given the complete U-turn in the comments from the Russian
finance minister," said Kathy Lien, director of currency
research at GFT Forex in New York. "We have started the new
trading week on a dollar-friendly tone."
The International Monetary Fund on Monday also threw its
support behind the U.S. unit, saying the dollar's status as the
world's dominant reserve currency is likely to remain. See
"Markets have been increasingly concerned about the status
of the U.S. dollar," said Camilla Sutton, senior currency
strategist at Scotia Capital in Toronto. "It's fairly clear to
most people there's no alternative."
In late New York trading, the ICE Futures' dollar index, a
gauge of the greenback's value against a basket of major
currencies, rose 1.2 percent to 81.112 .DXY.
The euro fell to $1.3755 against the dollar on electronic
trading platform EBS <EUR=EBS>, the lowest in more than 3
weeks, as investors worried about persistent economic weakness
in the euro zone. It last traded at $1.3792, down 1.6 percent.
The euro also fell sharply against the yen to 134.44
<EURJPY=EBS>, a roughly two-week low. It was last at 134.97
yen, down 2 percent from late on Friday.
Investors fretted about news suggesting euro zone banks
could face another $283 billion in writedowns. The figures were
published in the ECB's latest Financial Stability Review. See
Separately, a German industry group warned on Monday that
tight credit conditions are putting a squeeze on German firms,
which could hamper a recovery [ID:nLF082319].
Russia's remarks and concerns about the euro zone's economy
outweighed data showing a slump in New York state's factory
sector in June and a net capital outflow from the United States
in April. See [ID:nN15768]
The dollar fell 0.6 percent to 97.76 yen <JPY=EBS>, as U.S.
stocks declined sharply and dented investor appetite for risk.
The subdued risk sentiment also pressured higher-yielding,
commodity currencies, with the Australian <AUD=D4> and New
Zealand dollars <NZD=D4> both down about 2 percent versus the
greenback on the day.
"What we're going to find out relatively soon is just how
far we're going to go down in the stock market," said Andrew
Busch, global FX strategist at BMO Capital Markets in Chicago.
Should stocks fall, it would be "mildly dollar positive,"
he said. "But it won't last long. We're certainly away from the
severe dollar shortage that we had in the fall and in early
part of this year. The dollar overall is going to remain
(Additional reporting by Gertrude Chavez-Dreyfuss; Editing by
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