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Dollar keeps plunging vs. euro

02 June 2009 10:11 (UTC +04:00)

Baku- APA-Economics. The dollar continues its plunge to multimonth lows against the euro and the pound Monday as better-than-expected readings on manufacturing, consumer spending and construction spending drive investors to riskier assets.

The euro rose as high as $1.4197 according to electronic trading platform EBS, its highest since late December. Traders said market participants pushed the pair higher ahead of options expiries around the $1.42 region.

Sterling climbed to $1.6288, its strongest since early November. Gains against the dollar helped to push the pound to 82.0 against a basket of currencies, its highest level of the year.

Hope of an economic recovery has pushed the dollar down as investors trade it in for foreign equities and bonds. Further, continued worries over U.S. deficits and debt loads added to investors’ wariness on the greenback, AP reported.

Meanwhile, UBS AG said the euroâ€™s rally against the dollar may be entering its â€œlast stage,â€ and investors would likely benefit from selling the 16-nation currency against the greenback, according to Bloomberg.

The euro is set to weaken toward $1.30, analysts led by Mansoor Mohi-uddin, Zurich-based chief currency strategist at the worldâ€™s second-biggest foreign-exchange trader, wrote in a note to clients yesterday. The analysts reiterated forecasts for the euro to trade at $1.40 in one monthâ€™s time and weaken to $1.30 in three months.