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US dollar falls further as Japan joins other nations in rejecting American currency
Dollar Hits Two-Month Low Vs Euro
TOKYO (Reuters) - The dollar spun to a two-month low against the euro on Thursday, hit by comments from the Japanese prime minister that Japan's foreign reserves needed diversity.
But the U.S. currency rebounded slightly after a Finance Ministry official reassured a market anxious about any sign of countries diversifying reserves away from the dollar that Japan would not boost its euro holdings.
The euro rose as high as $1.3455 after spending much of the morning shuffling near the late U.S. level of $1.3392. By 9:53 p.m. EST it was fetching around $1.3415
The dollar was little changed on the day at around 103.95 yen after falling as far as 103.70 yen on Prime Minister Junichiro Koizumi's comments, near the one-month low of 103.65 yen hit on Wednesday.
A senior Finance Ministry official told Reuters that it has no plan to change the composition of currencies in Japan's foreign reserves -- the largest in the world.
That came close on the heels of comments from Koizumi to parliament that, generally speaking, diversity in Japan's foreign exchange reserves was necessary.
Traders said a range of factors have dented the dollar, including oil rising to near an all-time high and concerns about upcoming U.S. trade deficit data, though a prime mover was the attraction of currencies of countries with high interest rates.
"I think people will always find safety in being long in those sort of currencies," said Luke Waddington, head of forex trading at Royal Bank of Scotland.
"There's lots of different factors in terms of price action going off," he added.
The kiwi rose to its highest in almost 23 years after New Zealand's central bank raised interest rates by a quarter percentage point to 6.75 percent on Thursday, pushing the highest interest rates in the developed world to a new peak.
SOURCE
Reuters, "Dollar Hits Two-Month Low Vs Euro", 10 March 2005.
http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=7858972
"The Insider" mailing list article, 10 March 2005.
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