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Dollar likely to extend decline

09 October 2009 10:05 (UTC +04:00)

Baku -APA-Economics. The dollar may extend its decline after trading at its lowest level in almost 14 months against the currencies of six major U.S. trading partners as signs of global economic recovery spur demand for riskier assets, Bloomberg reported.

The euro strengthened versus the dollar after European Central Bank President Jean-Claude Trichet said yesterday the regionâ€™s economy is emerging from a period of â€œfree fall.â€ The rand posted the best performance against the greenback among 10 European, Middle Eastern and African currencies as investors sold dollar assets to earn higher yields.

The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, was at 75.903 at 6:05 a.m. in Tokyo, after falling yesterday as much as 1 percent to 75.767, the weakest level since August 2008.

Trichet signaled the ECB will keep interest rates at a record low to spur growth as the euroâ€™s 6 percent rally this year against the dollar threatens to undermine the recovery from Europeâ€™s worst recession since World War II.

The dollar depreciated 0.6 percent to $1.4782 per euro yesterday, from $1.4691 a day earlier. It earlier reached $1.4818, within a half-cent of $1.4844, a level touched on Sept. 23 and the weakest since September 2008. The euro rose 0.5 percent to 130.76 yen, from 130.18. The dollar slid 0.2 percent to 88.46 yen, from 88.61.

The greenback extended its decline even as policy makers called over the past week for strength in the worldâ€™s main reserve currency.