The US Dollar gingerly retreated from recent gains after comments from the United Arab Emirates soothed loan default concerns, taking away for now, the flow of safe-haven funds. The UAE’s Central Bank said on Monday that it would back the banks in Dubai after Dubai World, a private equity company, said it would need until the middle of 2010 to restart payments on its 59 Billion Dollars in debt accrued during the vast and elaborate expansion of Dubai’s infrastructure. An interest payment of 3.5 Billion that was expected to be paid in December was the first payment to be affected by the declaration. Some of the losses were stemmed by the Dollar however and trends were indicating a continued upswing after a senior Dubai financial official was quoted as saying that the “Government of Dubai does not guarantee Dubai World debt” leading investors to question the Central Banks comments.
At 10:45 GMT, the US Dollar was trading down .15% to the Euro to 1.5008, up .03% to the Japanese Yen to 86.54, up .2% to the British Pound to 1.647, down .35% against the Canadian Dollar to 1.058, down .78% versus the Australian Dollar to .9131 and down .2% against the Swiss Franc to 1.0039. The ICE Dollar Future Index was trading at 74.70, close to the 15 month low it reached early last week of 74.170.
The Japanese Yen weakened broadly on Monday after Deputy Prime Minister, Naoto Kan said, that due to the shock from Dubai World, Japan should do its best to stem the rise of its currency. He indicated that the government should work in tandem with the Bank of Japan to “stop the Yen’s rise”. As well, Japanese media reports that claimed the government will not get involved in the currency market for the sake of stemming the Yen were debunked by Japanese Finance Minister, Hirohisa Fujii. Mr. Fujii claimed that he had never said or indicated that intervention was out of the question, solidifying Japan’s resolve to help curb the Yen’s growth. For Monday at least, the openness expressed by Japanese officials, typically the quiet type, seemed to work towards lowering the Yen’s value in the open market.
At 11:00 GMT, the Yen was trading down .22% against the Euro to 129.97, down .18% versus the British Pound to 142.52, down .85% to the Australian Dollar to 79.07, down .27% against the Canadian Dollar to 81.69 and down .19% to the Swiss Franc to 86.15.
Written by Finexo.com