Finance

Home page

Finance

Dollar drops to one-week low vs. euro

06 March 2009 16:46 (UTC +04:00)

Bakuâ€“ APA-Economics. The dollar fell to a one-week low against the euro after a report showed the U.S. unemployment rate rose to the highest level in more than 25 years.

The yen dropped against most of its major counterparts as U.S. stocks gained on speculation the rate of job losses slowed, reducing demand for the Japanese currency as a haven. The greenback appreciated 1.1 percent versus the euro in February, its second straight monthly gain, as investors sought refuge from global economic turmoil.

â€œSafe-haven flows to the dollar are starting to fade now,â€ said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto. â€œThe dollar is struggling.â€

The dollar declined 1.4 percent to $1.2719 per euro at 9:36 a.m. in New York, from $1.2540 yesterday. It reached $1.2747, the weakest level since Feb. 27. The yen gained 0.5 percent to 97.63 per dollar from 98.07. The yen slid 1 percent to 124.27 versus the euro from 123.

The U.S. currency was headed for a 0.4 percent drop versus the euro this week, the first decline in a month. The dollar was little changed against the yen after five weeks of gains. The euro rose 0.6 percent versus the yen.

The Dollar Index, which the ICE uses to track the greenbackâ€™s performance against the currencies of six major U.S. trading partners, fell to 87.90, the lowest since Feb. 27.

Employers eliminated 651,000 jobs last month, following a reduction of 655,000 in January, the Labor Department reported today in Washington. The median forecast of economists surveyed by Bloomberg News was for a decrease of 650,000. The jobless rate increased to 8.1 percent, the highest level since December 1983, from 7.6 percent in the previous month.

â€œAbout a month ago, if we got this data the dollar would gain due to the safe-haven demand,â€ said Matt Esteve, a foreign-exchange trader at Tempus Consulting Inc. in Washington. â€œBut at this point, considering we have had month after month after month of awful economic news out of the worldâ€™s largest economy, it is pretty foreboding and scary for investors. This is leading some to sell dollars this morning.â€

More than 600,000 Americans filed claims for jobless benefits for a fifth straight week, the worst performance since 1982, the Labor Department reported yesterday.

â€œLabor market conditions may have worsened further in recent weeks,â€ Federal Reserve Chairman Ben S. Bernanke said in testimony before the Senate Budget Committee this week.

The dollar fell 0.7 percent against the euro when the Labor Department last reported job losses on Feb. 6. Demand for the safety of the greenback dropped on bets congressional passage of a U.S. economic stimulus package was imminent. President Barack Obama signed the bill into law on Feb. 17.