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Dollar drops as roaring markets foil 'safe' choice

Dollar drops as roaring markets foil 'safe' choice

The dollar eased off against the major currencies Tuesday during a day light on economic data and as stock markets worldwide mostly shot higher.
A memo from Citigroup Inc. Chief Executive Vikram Pandit saying the beleaguered bank was running an operating profit of $8.3 billion revved up U.S. equities, sending all the major indexes soaring by at least 3 percent.
The dollar has tended to benefit from falling equities as a safe haven, as investors desert stocks for U.S. government debt. Money flowing back into equities _ both at home and abroad, as was happening on Tuesday _ can leave the dollar softer.
While an increased taste for risk may prevail, increasing demand for commodities currencies such as the New Zealand dollar, "we remain fairly skeptical about the risk appetite that has returned to the market," said Matthew Strauss, senior currency strategist at RBC Capital in Toronto.
"We still believe that sentiment remains very fragile. We could see a very quick turnaround on any major developments, either in North America or anywhere else in the world."
The 16-nation euro rose to $1.2780 in New York late morning trading from the $1.2629 late Monday.
A European Central Bank official, Axel Weber, said Tuesday he would like the euro zone's key interest rate to have a floor of 1 percent.
Last week, the ECB cut its main refinancing rate by a half percentage point to 1.5 percent.
Lowering interest rates tends to weaken a currency as investors move funds to where they earn better returns.
Weber spoke at the press conference following the release of 2008 earnings for Bundesbank, the German central bank.
The British pound gained to $1.3867 from $1.3800 on Monday, while the dollar slipped to 98.26 Japanese yen from 98.85 yen.
The dollar also came off its multiyear highs Monday against other North American currencies. It dropped to 1.2785 Canadian dollars from 1.2959 late Monday. The buck had hit a more than 4-year high of 1.3064 Canadian dollars earlier Monday.
The dollar slipped to 15.3200 Mexican pesos from 15.4265 late Monday. On Monday night, the greenback also hit a record high of 15.5911 pesos. The peso has lost about 30 percent of its value against the dollar in the past year, even as its central bank has auctioned off more than $18 billion in foreign currency reserves since October to try to prop up its value.
In other New York trading, the buck weakened Tuesday to 1.1530 Swiss francs from 1.1587 francs.


Updated : 2021-04-19 02:24 GMT+08:00