LONDON, May 30: The dollar sank to 15-month lows against the euro and a six-month nadir against the yen on Thursday as fresh losses on Wall Street kept the US currency pinned against the ropes.
The single European currency jumped to 0.9400 dollars — its highest level since February 2001. It later slipped back to stand at 0.9374, against 0.9260 late on Wednesday in New York.
Meanwhile, the dollar tumbled to 122.85 yen — its lowest level since November — before partially recovering to 123.06, still well down on Wednesday’s level of 124.39.
“The ongoing negative sentiment in the US equity markets is not helping the dollar,” said Dresdner Kleinwort Wasserstein currency strategist Paul Mackel.
The fall from grace of once high-flying US stocks — which flirted with eight-month lows on Thursday — has called into question the ability of the United States to finance its massive trade deficit.
And increasingly the market is coming to the conclusion that US authorities will have to loosen their strong-dollar policy.
Against this backdrop, analysts said data released on Wednesday showing the euro-zone economies ran a trade surplus of 3.7 billion euros ($3.4 billion) in March, had also offered the euro support.
BNP Paribas currency economist Iain Stannard said the figures were very encouraging for euro holders.
“Portfolio, bond and equity flows into euroland have been positive, showing investors have been putting money into European asset markets,” he said.
The figures provided a sharp contrast with the situation in the United States, where data released earlier this month revealed the world’s biggest economy chalked up yet another hefty deficit — 31.6 billion dollars — in March.
The dollar also slid against the yen as traders looked to test the Bank of Japan (BoJ)’s resolve.
“Speculators have been buying dollars in the expectation of BoJ intervention. That’s not happened. Consequently we’ve seen people bailing out of long-dollar positions,” a trader at Nomura Research Institute said.
The euro was being traded at 0.9374 dollars against 0.9360 late on Wednesday, 115.35 yen (116.44), 0.6395 pounds (0.64) and 1.4655 Swiss francs (1.4672).
The dollar was worth 124.54 yen (124.59), and 1.5750 Swiss francs (1.5741).
The pound was at 1.4662 dollars (1.4617), 180.37 yen (181.88) and 2.29 Swiss francs (2.2916).
The price of gold on the London bullion market rose to 326 dollars an ounce from 325.20 dollars late on Wednesday.—AFP